Effective corporate governance requires that everyone involved has clear and structured roles and responsibility. It also assists in creating positive workplace culture which values diversity and encourages fairness and impartiality. These frameworks can be http://scoreboardroom.com/structure-of-a-typical-board-meeting-agenda/ applied to a diverse array of organisations, from large corporations to professional societies and families.
The board is responsible for drafting and approving corporate strategies that are designed to create sustainable long-term value; selects the chief executive officer (CEO) and supervises the management in operating the business. It also invests capital, assesses and manages risks and establishes the “tone at the top” for ethical conduct. The board typically consists of the insiders–major shareholders, founders, and executives–as well as independent directors with experience in managing or directing other large enterprises. Independents are seen as helpful in the governance process because they don’t have the same connections to insiders which can lead to conflicts of interest.
The composition of the board is critical because members are often dealing with technical issues which require a variety of perspectives. To this end, governance experts generally recommend that a board comprise at least a majority of independent directors. Diversity and tenure are also crucial to ensure that the board can effectively function, especially when discussions are long and filled with strong opinions. New additions to the board could bring fresh perspectives to the table and those with a longer tenure offer continuity and institutional expertise.
The board is also responsible for reviewing, understanding, and supervising the annual operating plans and budgets. The board, through its corporate governance committee and nominating committees, should regularly reach out to the largest shareholders to understand their views and keep in touch with them regularly on issues that affect the business.