Modern boards of directors must constantly adapt to changing times, changing technology, and changing expectations for companies and organizations. The most successful boards are able to combine strategic vision with effective group dynamics in order to make the best decisions possible. We’ve compiled a list of 5 effective board management strategies to help your board succeed.
1. Clearly separate the role of the board from the CEO’s ability to run the organization.
The CEO and the board of directors are a team. Starting from the time when a board finds and hires a CEO, the board and CEO must be on the same page about expectations, communication, and, most importantly, roles.
The board of directors provides oversight and input into an organization’s progress. Meanwhile, it is the CEO who is busy moving the company forward with day-to-day affairs. Keeping that in mind, boards of directors must be prudent in allowing the CEO to handle day-to-day affairs while keeping an eye on the organization’s trajectory over time. Likewise, the CEO must be open and available to answer questions from the board when trends (positive or negative) are noticed.
2. Keep your board of directors objective by only including outside parties in decision-making
There can sometimes be a tendency to include organization executives as members of the board of directors. Those executives offer some of the most direct insight into an organization’s processes, strengths, weaknesses, and more. However, the role of the board is to be an impartial and objective body.
Boards can run the risk of biases or conflicts of interest by including organization executives, since there are situations where those executives might have direct stakes in one kind of decision versus another. Those stakes may not even be financial: boards must sometimes decide on items like organization hierarchy or power structure, timing of projects, budgets.
Those action items directly affect executives’ abilities to do their work, and therefore an executives’ input may reflect more favorable conditions for their own department.
3. Connect board members with outside investors/stakeholders
All organizations are supported by an outside network. Large companies rely on investors, nonprofits rely on donors, and all organizations have stakeholders who are involved as partners, volunteers, or even customers. Modern companies are expected to be transparent about their values, operations, and their responsibilities to stakeholders.
One of the easiest ways to make stakeholders feel involved is to include them in meetings or designated communications. Those stakeholders want to be a part of the organization’s mission, and empowering them to do so makes your organization’s network stronger.
Thinking along the same lines, board members are really outside stakeholders who have joined the ranks to help an organization move forward. So, it can be wise to continue seeking outside insight from talented stakeholders who might have valuable perspectives.
4. Make risk management a pillar of your strategy
The ripple effects of an organization at risk go a long way. We mentioned a network of stakeholders in the previous point: when an organization faces an existential crisis, the ramifications can go far beyond the employees or direct members of the organization.
It is the board’s role to account for potential risks an organization may face, and prepare contingencies against those risks. If strategic thinking and taking risks drive progress, strategic defense and risk management are the safety nets. Both are essential for a company to thrive and continue thriving, especially in the face of modern challenges.
Cybersecurity, cultural or societal opinions, executive ethics: all of these potential risks can affect an organization’s long-term future. The best way to make sure risk is accounted for in a board’s operations is to designate risk as a major component of organizational strategy.
5. Have a diverse pool of talent, and keep your board members busy
It should go without saying that diverse talent on a board of directors leads to more specialized insight into a wider variety of topics. That diversity should come through finding people from different professions, from different ethnic or cultural backgrounds, from different genders. The list of factors that influence diversity goes on and on.
Most specifically, when it comes to specialized insight from professions, a board’s needs may change over time. Those needs might even be specific to a single project or transitional phase in an organization. Board leadership needs to be aware of what talents are required, when, and should regularly evaluate if their current board demographics fit the organization’s need at any given time.
A highly effective and efficient board should be running at full speed at all times. That means each director has an appropriate amount of responsibilities, clear deadlines, and has progress regularly monitored by leadership. As a board’s needs change, or priorities shift, new board members or outside talent can be recruited to fulfill needs and accomplish strategic goals.
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