It is essential for governing boards to refrain from managing the organization. That is the roleof the CEO. This article addresses nine key steps governance board take to avoid intrusion in the management of the entity:
1. A governance board determines how its role differs from the CEO’s role. It
- Ensures the Mandate is clear, focused and realistic
- Outlines the Lines of Business and holds the CEO accountable for honoring their parameters and limitations
- Selects its Model of Governance
- Writes Governance Policies
- Oversees the Budget and fiscal Risks
- Plans strategically ensuring what is written can be accomplished
- Becomes a champion for the strategic plan
- Monitors Risks in all aspects of its role
- Determines whom it Represents and weighs all options from the perspectives of those represented
- Is Accountable for all its decisions and the results obtained under its watch.
2. The board of directors sets the agenda for its meetings.
It knows what it needs reported to it when and how it will recieve the information. It does not leave agenda setting to the CEO.
3. The board determines which items on the agenda require a DECISION by the board.
The board separates those items which are placed on the agenda for information purposes only, those which are asking the board for advice only, and those which require a decision by the board.
A governance board ensures it makes all of its decisions promptly and does not let information or advice items divert it from its role.
It is essential to remember that when a board is asked for advice it may not be taken because the reciever may be seeking advice from several sources. The board may only be one of those sources.
4. The best boards determine which items on the agenda require the board to provide ADVICE to the CEO or other executive personnel who report to the board. Remember when you give advice, other sources may have been approached as well. Therefore, do not be disappointed if your advice is not followed.
5. The best governing boards view issues from the perspectives of the clients, the moral owners, the legal owners, the CEO, special interest groups, partners, governments, the personnel, those who would benefit from the decision, and those individuals who would be marginalized by the board’s decision.
6. Committees only perform governance functions. The board of directors clearly
- determines which functions it will assign to a committee
- ensures the functions do not include management duties
- requires committees to analyze all options and the associated pros and cons
- advises the committees that it is essential to advise the board of all risks associated with each option considered
- delineates the term for the committee and states when and how a committee ceases to be required.
7. Governance boards agree to make decisions on governance issues only and refuse to entertain management issues.
8. The board of directors do not allow controlling CEOs to tell it what it should be doing or how the board should go about fulfilling its role. It refuses to be intimidated or accept responsiblility for duties it has assigned to the CEO.
9. The board is not swayed by the board members’ personal agendas. These agendas could include
- wanting the organization does not make a specific decision
- desiring the organization to hire a specific person
- aspiring to influence a specific contract
- wishing that a specific person or organization be recognized, or
- involve retaliation based on past decisions by the CEO.
The board remains steadfast in its committment to govern. it seeks advise when it is not clear about its boundaries, makes decisions and sets the stage to ensure it leaves a positive legacy.
