Boards are unique leadership structures that hold significant power and a responsibility for those outside the organization as well as to those who are inside it. However, they operate within a flexible structure that is only limited by guidelines for each state and the collective will of a board to change its composition and structures.
The board has many responsibilities but should focus on the oversight and management of decisions. They should leave operational matters to the executives and CEOs. That means establishing an oversight system and establishing guidelines for their actions and the actions of managers. It also involves paying attention to regulatory and legal issues and compensation, conflicts of interests and community benefits, as well as the evaluation of CEOs.
A sound governance system is essential for the board’s work and it should contain clearly defined roles and obligations of each director and committee. Directors should be allowed to log on and use the board portal. This allows directors to efficiently prepare for meetings, and lets board discussions be focused on the primary issues of the meeting. It also facilitates better communication between members, and a smoother transition when board member rotations occur.
A good governance system should include the appointment of an independent director who is responsible for the smooth running of meetings as well as setting the agenda. It should also include scheduling executive sessions according to the requirements of stock exchanges, and time for directors to meet individually with the CEO even if management is not present.
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