Boards have 3 primary roles – to establish policies, to take important and strategic decisions, and to supervise the company’s activities. The right policies help boards focus its efforts, avoid duplication of effort and maintain the essential (but often thin) distinction between oversight and management activity.
Effective boards must be able to identify and addressing any new mission-critical issues. To do this, boards must have access to as accurate and complete information as possible. This information can include narrative reports about internal and external operations, as well as narrative reports on expenditures and budgets. It’s crucial for a board to comprehend and be capable of communicating the narrative told by these data.
Board members should be competent to discuss controversial and complex issues even if it causes tension within the group. It’s important for directors to have the freedom to challenge one another and play a variety of roles on the board – the ruthless cost cutter, the damn-the-details big picture guy, or the split-the-differences peacemaker. Playing different roles allows directors to gain a full view of the options that the board has.
While it’s widely thought that good boards have board members with a www.toboardroom.com/how-to-write-board-meeting-minutes/ lot of personal involvement in the company, research suggests that this isn’t an important factor to consider. For instance, the boards of failed companies as well as those of highly admired corporations were roughly the same proportion of outsiders. The key appears to lie in the process of discernment and communication of the company’s strategies and risks and the quality of discussion and dialogue.
