Getting the most out of Board Meetings and Dealing with Board Governance
The governance of equity corporations has never been exemplary. Recent events have exposed the fecklessness of boards of directors, their underdeveloped methods, their inability to control management appropriately, and the futility of piecemeal solutions to defective board leadership.
- At one extreme Boards of Directors often see their work as an upward extension of management, a group form of the managing process.
- At the other extreme too often Boards are custodial and reactive.
- These perspectives bring confusion of roles, conflict between strong board and strong management, and often the pre-empting of board authority by managers.
- A bizarre inversion often occurs in the chain of command
- In most corporations, management governs governance instead of governance governing management.
- Proper governance is not management one step up, but ownership one step down.
Functional Board Characteristics
- Independent
- Separation of CEO and Chair roles
- Rigorous audit committees and accountable accounting
- Shareholder-focused
- Board-and management-empowering
- Adherence to acceptable behavior (set the ethical tone)
- Continuous assessment of organizational purpose
- Monitoring performance of the enterprise
- Approve major capital expenditures, acquisitions and divestitures
- Approving the strategic plan
- Advising the CEO and the management team
- Approving debt/equity ratios
- Guiding succession planning
Questions:
- Do you have a Board and is it functional?
- Do you perceive that a Board can provide significant value?
- What are the obstacles to achieving a functional Board?
- Is the perceived value of a functional Board important enough to overcome the obstacles?