Structuring an Effective Board

Back in 2017 I gave a presentation on ‘Structuring an Effective Board’ which covered important aspects to ensure that boards do not become dysfunctional and lead to a disaster for shareholders, executives, clients, and employees. If a board is in turmoil or disorganized, then strategic direction will be lost and before too long, business performance will suffer rapidly.

Every board needs an efficient and effective chair and it is the chair that is responsible for its efficient and effective functioning. The chair also organizes the composition of the board, and leads the board in the determination of its strategy and in the achievement of objectives.

There must also be effective boundaries between the board and CEO as the key to a successful organisation is a respectful and productive working relationship between the board and its CEO.

The true role of a board is to govern the affairs of the business or association but not to meddle or involve itself in the operational aspects. A board focused on governing always keeps the strategic direction of the business at the forefront of proceedings.

The board is there to coach and/or support management, to set the strategic direction, provide management with the necessary resources to achieve this, monitor the performance of the company and always ensure compliance. We must also remember that performance is not just financial, there are also the operational areas which add value to all business outcomes.

Boards should also evaluate their performance which typically start with a review of board structures and processes. These evaluations are usually best managed by an independent and experienced person skilled in corporate legal requirements including experience in both financial and operational aspects of business management.

Board meetings should be creative and effective covering strategic direction, succession planning, compliance, and capital expenditure/investment

Meetings should have a simple yet effective agenda and always be cognizant of sound corporate governance.

Finally, it is not considered a good idea to have a combined Chairman and CEO

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