Best practices for Board Governance can assist boards in fulfilling its role as an oversight body. They include having a mixture of directors with diverse backgrounds, ensuring an appropriate committee structure and size as well as creating a transparent and open board meeting setting. The key to all of these is to ensure that the roles and responsibilities of the board are clearly defined.
The first step is typically to create matrices that outline the unique roles each director or executive team members have. These matrices then get reviewed and periodically updated. Based on the needs of each firm, the most effective practices could also include a diversity criteria, which seeks to ensure that boards are composed of members that are diverse in terms of gender, age and ethnicity as well as tenure.
Another crucial aspect of this modern best practice is making sure that the board’s strategy and goals are aligned with those of the company. This is what is Boardvantage a complex task that requires the board’s full attention. The board must create guidelines for governance that will allow it to function as an enabler for the executive team, not as a stifler.
Boards must also establish an internal framework to identify risks and their possible impact on performance. They should evaluate all possible risks against the probability of success and the cost. This could include asking for feedback from the management team regarding the amount of risk the company can bear. The board should be able to work together to analyze all relevant information, take decisions and devise a plan for managing risk.
