The job of the board is to provide direction and supervise the executive management team. It ensures that company policies are in place, and that all fiduciary responsibilities are met. Some boards grant too much power to executive leadership. Many do not. The media is full of stories about business disasters due to corrupt or incompetent management teams.
To avoid such disasters It is essential to ensure that your board includes diverse perspectives and capabilities. It should also work well as a team. This requires you to establish specific management guidelines for your board which include welcoming diversity into your board and taking on leadership roles, fostering an agile structure (e.g. the formation of committees to address the new threats) and ensuring ongoing evaluation of the board and its the individual members.
Another important principle of management for boards is to not get too involved in operational issues, especially when it comes to the day-to-day operations of your company. The primary function of a board is to define the long-term goals of your company and its place in society.
While this may sound like a no-brainer, many businesses struggle with this concept. For example the board members may begin having meetings directly with management without the CEO’s knowledge, or jump to conclusions in an effort to be helpful. This can put the CEO in a difficult position. The CEO must collaborate with the chairman of the board and other directors to resolve the issue and restore trust.
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