By: Sandi Verrecchia @satoriinsight
Good Board Governance practices are not a one-size fits all proposition. Organizations must design and implement governance practices that both conform to legal requirements and meet their individual needs. However, there are some corporate governance practices that experts agree will create highly effective boards.
1. Get the right people on the board
Look around your board table. Your board should be made up of directors who are knowledgeable and have expertise relevant to your business. Each director should fill a need through a thorough competency gap analysis. Each director should have strong ethics and integrity and most importantly they should have a thorough understanding of their duties and have sufficient time to commit to those duties.
2. Evaluate performance
There are two distinct reasons for evaluating performance:
- To identify gaps in the current director complement and identify the ideal qualifications and characteristics required for optimal succession planning.
- To set directors up for success through individual learning and development. A rigorous peer review process is a way to provide feedback to each director and to build out action plans that help each director be the best they can be. Peer reviews are an excellent way to regularly assess whether directors are fulfilling their duties and to create a platform for dialogue that is confidential and meaningful.
3. Clearly define roles and responsibilities
Establish clear lines of accountability among the Board, Chair, CEO, Executive Officers and management: Best practice is to have a separate Board Chair and CEO. Develop written position descriptions for the Board Chair, Board committees, the CEO and executive officers.
4. Engage in effective risk management
The Board is responsible for strategic leadership in establishing the organizations risk tolerance and developing a framework for managing risk. Risks such as financial, operational, reputational, environmental, industry-related, and legal should be identified and reviewed regularly. Directors are responsible to understand the current and emerging short and long-term risks and the performance implications that could result. Directors should challenge the adequacy of the systems and controls that are in place to mitigate the risks.
A clear disclosure of director activities including compensation, meeting attendance, expenses and education helps maintain an effective board.
Satori Consulting Inc. is a Management Consulting Firm that focuses on business growth, governance and leadership. We provide confidential peer reviews and coaching aimed at accelerating board effectiveness.
CMC, CPCC, MBA
Sandi Verrecchia is a Certified Management Consultant, holds a Masters degree and is a professional Leadership Coach. With over 20 years of experience in the financial services, academic and not for profit sectors, her diverse background of consulting, operations, marketing and sales is a wonderful compliment to her passion for coaching.