Boards are unique leadership structures that have considerable power, and they have a duty to all both inside and outside of the organization. However, they are the framework of a flexible structure, which is only limited by basic guidelines for each state and the collective will of a board to alter its composition and structures.
While boards have more many duties, they should primarily focus on oversight and management policy decisions while leaving operational matters to the executive team and CEO. This means developing policies and a governance system to guide both their actions and the management’s. It also requires focusing on legal issues like compensation, conflict of interest, community benefits and CEO evaluation.
A good governance system is essential to the work of a board and should include clear documentation of the roles and obligations of each director and committee. It must also be easily accessible to all directors through a board portal. This helps directors effectively prepare for meetings and keep discussions on the board focused on the main issues of the meeting. It also helps improve communication between board members as well as an easier transition when board members rotate.
A sound governance system includes the appointment of an independent director who is responsible for the smooth running of meetings as well as setting the agenda. Additionally it should include the scheduling of executive meetings in conformity with the requirements of stock exchanges and a time limit for directors to have a private meeting with the CEO in the absence of management.
