The job of a board is to provide direction and oversight to the executive management team, and to ensure that company policies are adhered to and that all fiduciary responsibilities are met. While some boards grant too much authority to their executive leadership, most do not go far enough. The media is filled with stories of business failures that are caused by corrupt or incompetent management teams.
One of the best ways to avoid such catastrophes is to ensure that your board is comprised of a wide spectrum of perspectives and skills and can work effectively as a group. This requires the establishment of the principles of management for your board, such as embracing diverse perspectives and assuming the leadership roles, as well as fostering an flexible structure (e.g. the formation of committees for new risk areas) and involving in continuous assessment of the board and individual members.
Another important principle of management for boards is to not get too involved in operational issues, especially when it comes to the day-to-day activities of your business. This is because a large part of the work of a board is to set the long-term vision for your company and how it can fit into society.
Although it may seem like a no-brainer, many companies have a hard time with this idea. Some board members, for instance hold meetings directly with management without the CEO’s knowledge. They also make quick decisions to be helpful. This can put the CEO in a precarious position. The CEO should work with the board chairman and other directors to solve the issue and regain trust.