Boards are unique leadership structures that hold significant power and a responsibility to those outside the organization as well as those within it. They operate within a spherical framework that is governed by state-by-state guidelines and the collective will to alter their composition and structure.
While boards have many duties they should concentrate on oversight and management policy decisions, while delegating operational issues to the executive team and CEO. This requires the development of policies and a governance system to guide their decisions and the managers’. It also involves paying attention to legal issues like compensation, conflict of interest, community benefits and the evaluation of CEOs.
A good governance system is vital for the board’s work and should include clear documentation of the roles and the responsibilities of each director as well as committee. All directors should be in a position to access and use the board portal. This allows directors to plan meetings efficiently and helps keep board discussions focused on the primary concerns of the meeting. It also facilitates better communication between members, and a smoother transition when board member rotations occur.
A sound governance system includes the appointment of an independent director who is responsible for the smooth functioning of meetings and also sets the agenda. Additionally it should also include the schedule of executive sessions in accordance with the requirements of the stock exchange and a provision for directors to have a private meeting with the CEO in the absence of management.