Boards are unique leadership structures that hold significant power, and they are accountable to those who are both inside and outside the organization. However, they operate within a flexible structure that is only limited by basic state-by-state guidelines and the collective will of a group to change its own structure and composition.
Boards have many duties but should concentrate on oversight and management of decisions. They should delegate operational decisions to the CEOs and executive teams. This means developing guidelines and a governance framework to guide their decisions as well as the management’s. It also involves paying attention to regulatory and legal issues including compensation, conflicts of interests and community benefits, as well as the evaluation of CEOs.
A good governance system is essential to the activities of the board. It should include clearly defined roles and responsibilities for every committee member and director. It should also be easily accessible to all directors via a board portal. This will allow directors to plan meetings efficiently and keep discussions on the board focused on the primary issues of the meeting. It also allows for better communication between members and an easier transition when board members rotate.
A good governance system includes the appointment of an independent director who is accountable for the smooth running of meetings and sets the agenda. Additionally to that, it should include appointment of executive sessions accordance with stock exchange requirements and a provision for directors to meet individually with the CEO in the absence of management.
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