The role of the board is to run the business by exercising a active and consistent supervision in crucial areas like strategy and risk. But it cannot manage — or micromanage the business of the company by infringing on management’s responsibilities, which are designed to assist the executive team and CEO create value for shareholders.
Boards must have an organized structure and a clear governance framework to do their job effectively. This includes a clear definition of roles that extend from the chairperson to directors as individuals, as well being able to establish a method for determining priorities and making decisions.
Furthermore, a strong board governance framework requires a well-rehearsed process for planning meetings and agenda items. It also includes a robust governance structure that outlines clearly the purpose of the board and its relationship with management. The framework also contains an explicit statement of the board’s governing values and standards, including honesty, transparency and good communication.
In addition, the board must have a clear and concise plan for identifying and forming an executive and overseeing succession planning. It should have a clear plan for how it will address urgent issues that arise and be able to change its focus and activities if the need arises. The governance of the board should be in line with business practices and the board must be able to anticipate and react to the changes that take place in the current fast-paced and highly complex environment. Board members must dedicate lots of time and energy to their work as board members.