When a CEO and mother board of directors are fully control of a company, it can seem to be invincible. But as Enron reveals us, even innovative, remarkably respected corporations can crash and burn off, with criminal arrest charges recorded against management and shareholders filing billions in lawsuits. To tell the truth that even a small misstep in governance can lead to tragedy and public distrust.
Excellent table governance doesn’t exist, yet boards can adopt best practices to improve their particular performance. Getting a high-performing board depends on aligning the roles of the executive staff and the plank. While policies are important equipment, achieving aiming requires crystal clear understanding of the board’s function in appointment its proper needs and procurement of vital information for decision-making.
For example , a superb practice is to clearly establish a matrix that helps control understand if the board can expect to be contacted or prepared about is important that don’t require mother board decision but are learn corporate governance structure the main governance procedure (such as proposals by committees). Similarly, a good practice is for a board to get a system to get managing the agenda hence members know whether the item they are considering is for information simply, for action, or perhaps for tactical discussion and will focus on the most important items.
One other truth is for boards to have powerful processes with respect to identifying and exploring potential biases and blind spots, hence they are not really caught away guard simply by unintended effects of decisions. This consists of establishing a culture of practical specialist skepticism and ensuring that board members have the courage to boost red flags and demand acceptable answers, especially when coping with mission-critical problems.