The role of the board is to oversee the business by providing rigorous and thorough oversight in key areas such as strategy and risk. However, it is not able to micromanage the company’s operations by intervening in management’s duties. These responsibilities are meant to help executives and the CEO deliver value for shareholders.
Boards must have an organized structure and a clear governance framework to do their job effectively. This includes a clear separation of roles from the chairperson up to the individual directors as as a decision-making process that is established for determining the priorities.
Additionally, a sound board governance system requires a well-planned method for planning meetings as well as agenda items. It also includes a solid governance system that clearly defines the role of the board, its function and relationship with management, and the authority it has. The framework also contains an explicit declaration of the board’s governing values and standards, which include integrity, transparency, and good communication.
The board should also have a clearly defined plan for selecting the CEO, preparing that person and overseeing the succession. It should have a plan for how it will address urgent issues that arise and be ready to shift its focus and actions when the need arises. The rules and procedures of the board must be in sync with the business environment and the board needs to be able to anticipate and respond to the changes that are happening in today’s fast-paced, highly complex environment. Board members need to dedicate much of their time and energy to their work on the board.