As the complexity of business and boards is increasing the issue of how to ensure that governance is effective is becoming more crucial. This guide will help you understand the essential pillars to an effective board of directors:
1. Board members clearly understand their roles and have the resources they require to be successful in their job.
Every director should be clear about what they are expected to do as members of the board and how they can contribute to helping the business achieve its strategic goals and its mission. This transparency should be demonstrated in the processes for director selection and refreshment of the board as well as succession planning. The presence of a board administrator (or an executive member of the management team) who is committed to helping with these responsibilities is also important.
2. The board evaluates its own performance and the structures of other boards with which it works.
A regular evaluation of the board allows the board to evaluate its performance with benchmarks in a variety of areas such as risk and strategy, financial oversight, diversity, and inclusion. This can aid the board in identifying weaknesses in their skills and formulate a strategy for addressing them.
3. Board members actively seek out new perspectives and learnings from a variety of sources.
Directors should be able to discuss and debate issues with – instead of simply listening to presentations from the management, independent advisors, and employees as part of the board’s responsibility. Boards that are able to effectively elicit diverse perspectives, including those from minorities and women, are able to boost innovation and reduce blind spots.
