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A board’s job is to provide guidance and oversight to the executive management team, ensuring that the company’s policies are followed and that all fiduciary responsibilities are met. Some boards grant too much power to executive leadership. Most do not. Sadly, the media abounds with tales of business disasters which are the result of incompetent or corrupt management teams.
One of the best ways to avoid disasters is to ensure that your board is comprised of a wide range of skills and perspectives and is able to work well as a whole. This requires establishing certain management principles for your board that include taking into consideration diversity when forming your board and assuming leadership roles, fostering agile structure (e.g. setting up committees to deal with new threats) and engaging in continuous assessment of both the board as a whole and individuals.
Another board management principle is not to get too involved in the day-to-day activities of your business. This is because a major part of the job of a board is to determine the long-term direction for your business and how it is integrated into society.
This might seem like an obvious idea however, many companies struggle to implement this concept. Certain board members, for instance hold meetings directly with the management team without the CEO’s knowledge. They also quickly make conclusions that could help. This puts the CEO in a bind spot. The ideal scenario is for the CEO to work with the board chair and other directors to address this issue and establish trust again.
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