The board’s role is to run the business by exercising a rigorous and arduous control over key areas, including risk and strategy. However, it is not able to manage or control — the company’s business by encroaching upon the management’s duties, which are designed to assist the executive and CEO deliver value for shareholders.
In order to be effective in their work boards need an established governance structure and framework. This includes a clear description of roles that extend from the chairperson to directors as individuals, as well as an established decision-making procedure for determining priorities as well as making decisions.
In addition, a solid board governance framework requires a well-rehearsed method for planning meetings as well as agenda items. It also incorporates a robust governance system that clearly defines the role of the board, its responsibilities and relationship with management, as well as the authority of the board. The framework also contains an explicit declaration of the board’s governing principles and standards, which include integrity, transparency, and good communication.
The board should also have a well-defined plan for selecting the CEO, training that person and overseeing the succession. It must have a specific plan for how to address urgent issues that arise and be ready to change its focus and activities when the need arises. The rules and procedures of the board must be in sync with the business and the board must be in a position to anticipate and respond to the changes that are occurring in today’s fast-moving and highly complex environment. Board members should devote lots of time and energy to their work on the board.