The Board’s Corporate Governance Role
Boards are required by law to exercise due diligence to ensure that the organization fulfills its goal and has a sound strategy and does not become involved in legal or financial difficulties. The manner in which boards are required to fulfill these obligations differs widely and is dependent on the situation.
A common mistake is that boards get involved in operational details which should be left to management, or they are not aware of their own legal responsibilities for the decisions they take and the actions they make on behalf of the company. This confusion is usually due to the fact that they are not keeping up with the ever-changing demands on boards or unanticipated issues such as financial crisis and resignations of staff. This is typically resolved by taking the time to discuss the issues facing directors and providing directors with easy-to-read materials and orientation.
Another mistake that is common is that the board delegates too much power and decides not to review the issues it has delegated (except in the most small of NPOs). In this situation, the board loses its evaluation function and can no longer determine if these operational activities contribute to a satisfactory performance of the entire organization.
The board also needs to develop an organizational structure for governance, including how it will interact with the general manager or CEO. This includes determining how the board will meet regularly, how members will be chosen or removed and how the https://howtoadvertiseyourblog.com/ board will make its decisions. The board must also create information systems that can provide valid data on past and future performance to help in its decision-making.