Boards are unique leadership structures that hold substantial power. They have a duty to all both inside and outside of the organization. They operate within a flexible structure that is only limited by state-by-state regulations and the collective will to alter their composition and structure.
Boards are responsible for a variety of responsibilities, but they should concentrate on the oversight and management decisions. They should leave operational decisions to the CEOs and executive teams. This means creating an organizational structure for governance and developing policies to guide their actions as well as those of managers. It also includes paying attention to legal issues, compensation, conflict of interest, community benefits and CEO evaluation.
A well-designed governance system is vital for the operation of the board. It should contain explicit documentation of the duties and responsibilities of each committee and director. It should also be easily accessible and available to all directors through the board portal. This allows directors to prepare efficiently for meetings and keeps discussions of the board focused on the main issues of the meeting. It also facilitates better communication between members as well as a smoother transition when board member rotations occur.
A good governance framework includes the appointment of a lead or presidency director, an independent board member who is accountable for the efficient management of a meeting and how to start a board meeting also sets the agenda. In addition it should also include the appointment of executive sessions accordance with requirements for stock exchanges and a time limit for directors to have a private meeting with the CEO in the absence of management.