Boards are unique leadership structures that have substantial power and responsibilities for those outside the organization as well as those inside it. They operate within a flexible structure that is governed by only basic guidelines set by states and the collective decision of a board to alter its own composition and structures.
While boards have many duties, they should primarily focus on governance and oversight decisions, leaving operational matters to the executive team and the CEO. This means developing guidelines and a system of governance to guide their decisions as well as the management’s. It also involves focusing on regulatory and legal issues including compensation, conflicts of interest and community benefit as well as the evaluation of CEOs.
A well-designed governance system will be essential to the activities of the board. It should contain clearly defined roles and responsibilities of each committee and director. All directors should be able to access and use the board portal. That enables directors to efficiently prepare for meetings and lets board discussions stay focused on the core issues of the meeting. It also helps improve communication between members and a smoother changeover when board members rotate.
A good governance system also includes the appointment of a lead or presidency director, an independent board member who is responsible for the effective conduct of a meeting and also sets the agenda. It must also include scheduling executive sessions in accordance with requirements of the stock exchange and a time for directors to meet in private with the CEO when management is not present.