The role of the board is to govern the business by exercising a strict and diligent control over key areas like strategy and risk. But it can’t also manage, or micromanage — the company’s business by infringing on management’s responsibilities that are designed to help the executive and CEO deliver value for shareholders.
To do their jobs effectively, boards must have an established governance framework and structure. This includes a clear definition of roles that extend from the chairperson to individual directors, as well as an established decision-making procedure for determining priorities as well as making decisions.
A sound board governance framework requires a well-practiced method for arranging meetings, which includes the agenda items. It also provides a solid governance framework that defines clearly the role of the board and its relationship with management. The framework also includes an explicit description of the board’s values and standards, which include honesty, transparency and good communication.
The board should also have a well-defined strategy for identifying the CEO, training the person, and overseeing the succession. It should have a clear plan for how it will address urgent issues that occur and be prepared to shift its focus and activities when the need arises. The board’s governance procedures must be aligned to the business and the board must be able to anticipate and respond to any changes that happen in the current fast-paced and highly complex environment. Board members must devote lots of time and energy to their board work.
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