The role of a board is to provide guidance and oversight to the executive management team. They also ensure that the company’s policies are in place and that all fiduciary responsibilities are met. Some boards grant too much power to the executive leadership. The majority of boards don’t. The media is full of stories about business disasters caused by incompetent or corrupt management teams.
To avoid the occurrence of such catastrophes, it is important to ensure that your board includes a wide range of perspectives and expertise. They should also work together as a unit. This requires the establishment of guidelines for managing your board such as accepting different perspectives and taking on leadership roles, creating an agile structure (e.g. forming committees for new risks) and engaging in continuous assessment of the board and its individual members.
Another key principle for a board of management is to avoid getting too involved in operational issues, particularly when it comes to the day-to-day activities of your business. A board’s main job is to define the long-term goals of your company and its place in society.
This may appear to be a no brainer however, many businesses struggle to implement this idea. For example there are board members who start meeting directly with management without consulting the CEO or decide to make a decision in the hope of being helpful. This could put the CEO in a tough position. In the ideal scenario, the CEO will work with the chair of the board and other directors to address this issue and establish trust again.