As the complexity of boards and business continue to increase, the question of how to ensure the best governance is becoming more crucial. This guide outlines the essential pillars for a well-functioning board of directors:
1. Board members must be able perform their duties with ease as long as they are aware of their roles and have the resources necessary.
Every director should be clear about what they are expected to do as an officer of the board and how their contribution will help the company attain its strategic goals and its mission. This clarity should be expressed in processes for director recruitment, board refreshment and succession planning. The board administrator (or a member of the management team) who is committed to helping with these duties is also essential.
2. The board regularly assesses its own performance and structure as well as the other boards it works with.
A regular evaluation of the board enables the board to evaluate its performance against benchmarks in different areas, like risk and strategy financial oversight, diversity, and inclusion. This can assist the board in identifying skills inefficiencies and develop a plan to address these.
3. Board members constantly seek to hear new perspectives and perspectives from diverse sources.
All directors must be willing to discuss and debate issues with – instead of simply listening to presentations from management, independent advisors and employees as part of the board’s duties. Boards that can effectively elicit diverse opinions such as those of minorities and women are more likely to innovate and reduce blind spots.