Board Governance Best Practices

Board governance best practices are the ones that can will help a board succeed in its function as an oversight body. This includes having directors with different backgrounds, keeping an appropriate structure for committees and size, and encouraging an open and honest board meeting setting. To achieve these objectives, it is essential to ensure that the board’s roles and responsibilities are clearly defined.

The initial step is to create matrixes that detail the unique responsibility of each director and the executive team. These matrices are then reviewed and updated regularly. Depending on the specific needs of each company, best practices could include a diversity criteria, which aims to ensure that boards are comprised of members that are different in terms of gender, age and ethnicity as well as tenure.

Another key aspect of this 21st century best practice involves ensuring that the board’s strategies and objectives are in line with those of the business. This is a complicated task, which requires the full attention of the board. The board must create governance policies which allow it to serve as an enabler, rather than a stifler, of the executive team.

Boards should also create an internal framework to identify risks and their impact on performance. They must consider all the possible areas of risk, weighing them against the chance and the cost of success. You can ask the management team to provide feedback on the level of risk that the company will take. The board must be able to collaborate in evaluating the information, make a decision and formulate an appropriate risk management strategy.