The role of the board is to oversee the business by exercising vigorous and diligent control over key areas, including strategy and risk. However, it is not able to manage or control the company’s business by infringing on management’s responsibilities that are designed to help the CEO and executive team provide value to shareholders.
To perform their tasks effectively, boards must have a clear governance framework and structure. This includes a clear separation of responsibilities from the chairperson to the individual directors as being a decision-making procedure which is established to determine the priorities.
Additionally, a solid board governance framework requires a well-rehearsed process for arranging meetings and agenda items. It also incorporates a strong governance system that clearly defines the role of the board, its role and relationship with management, and the scope of its authority. The framework contains a statement of the board’s governing standards and principles, including integrity and transparency.
The board should also establish a plan for selecting the CEO, preparing that person and overseeing the succession. The board should have a strategy to deal with urgent issues and be prepared to shift its focus when required. The board’s rules of governance must be aligned with business, and the board must be prepared to anticipate and react to the changes occurring in today’s fast-moving and highly complex environment. Board members need to dedicate a lot of time and energy to their board’s work.