A strong board of directors does effective work, executing its fiduciary responsibility to safeguard shareholders’ interests and increase shareholder value. This includes safeguarding the company’s financial reporting as well as ensuring transparency in its disclosure and encouraging positive relationships with all stakeholders. Additionally, it fulfills its broader obligations, which include encouraging innovation, driving sustainable development and risk management, helping the development of talent and culture, and maintaining a balanced between operational activities and strategy supervision.
A well-functioning board is able to accomplish these tasks in a productive manner by using an efficient collaborative process. The board has clearly defined roles, which are facilitated by the chairman and aided by a structured, effective process for nominating and succession. Directors are aware of their role on the board and how it is connected to the strategic goals of the company. They are not afraid to speak up and express their opinions at this article meetings or in other situations.
It is important to have the right mix of diverse people in the boardroom. The board should reflect the diversity of its stakeholders, including gender or ethnicity, age, experience and skills. A uniform and transparent selection process, that eliminates discrimination or bias, could help ensure this. The board must also actively search for new members and ensure that all members are actively engaged and taking part in the process.
It is essential that all directors participate fully in the board’s decisions and that there is an atmosphere of positivity and respect. This can be a challenge because the growing number of days that directors work on the board means more frequent meetings and more extensive agendas.
