Board Management Principles

A board’s job is to provide direction and oversight to the executive management team, and to ensure that the company’s policies are in place and that all fiduciary obligations are met. Some boards grant too much power to the executive leadership. The majority of boards do not. The media is full of stories of business disasters that were due to corrupt or incompetent management teams.

To avoid the occurrence of such catastrophes it is crucial to ensure that your board has an array of perspectives and expertise. They should also work well as a team. This means establishing certain board management principles, such as taking into consideration diversity when forming your board and taking on leadership roles, encouraging a flexible structure (e.g. setting up committees to deal with new dangers) and engaging in continuous evaluation of the board itself and the individual members.

Another key principle for a board of management is to stay clear of getting too involved in operational issues, particularly when it comes to the day-to-day operations of your company. This is because a significant part of the job of a board is to create a long-term goals for your company and how it is integrated within the wider society.

This might seem like a no brainer however, many businesses struggle to implement this concept. For instance the board members may begin meeting with management directly without consulting the CEO or jump to conclusions in an effort to be helpful. This could put the CEO in a precarious position. The ideal situation is for the CEO to work with the chair of the board and other directors to address this issue and build trust again.

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