The principles of management for boards determine how a board runs its affairs. They regulate the relationship between a company’s Board of Directors and how it oversees corporate issues that cannot be delegated by lower-ranking officials.
The board of directors is responsible for many things which cannot be included in the annual report of a business. For example the board must find and appoint a CEO, ensure that the company is acting in its best interest, and report any issues to shareholders. The board also plays the responsibility of assessing the company’s potential and capacity.
Many boards are conducting annual assessments to improve their performance. These assessments can be focused on the board or its committees, individual directors, or even the chair.
Another popular practice is keeping a written record of every meeting. This helps the board to understand how its actions affect others like employees and investors. A well-written set or minutes can prove valuable evidence in legal instances.
The board should also be able to identify and evaluate risk. This involves identifying the weaknesses of the business and devising strategies to address or prevent them from occurring. It also includes determining the impact of any potential changes on stakeholders, such as communities. Additionally, the board must make sure that it is informed about all major developments in a timely manner. For example, the board must know when CEO compensation is out of hand compared to company performance and the average wage paid to employees.