A board’s role is to provide guidance and oversight of the executive management team. They also ensure that company more policies are adhered to and that all fiduciary responsibilities are fulfilled. Some boards grant too much power to the executive leadership. They don’t. The media is brimming with stories of business disasters that were due to corrupt or incompetent management teams.
One of the most effective ways to prevent such problems is to ensure your board has a full spectrum of skills and perspectives and works well together as a unit. This means establishing the principles of management for your board, such as embracing diverse perspectives and taking on leadership roles, encouraging an flexible structure (e.g. the formation of committees for new risks), and engaging in continuous evaluation of the board as well as individual members.
Another board management principle is to not be too involved in the day-to-day activities of your company. This is because a large portion of the role of a company’s board is to establish the long-term vision of your company and how it can fit into society.
Although it might sound like a straightforward idea, many companies are struggling with this idea. Certain board members, for instance initiate meetings with the management, without the CEO’s knowledge. They also make quick decisions to be helpful. This could put the CEO in a precarious position. The CEO must work with the chairman of the board and other directors to solve the issue and restore trust.
