The Board’s Corporate Governance Role

Legally the board is required to ensure that the organization accomplishes its goals, has a solid strategy and doesn’t run into financial or legal problems. However, the method by which boards are involved in the responsibilities of these boards can be very different and is dependent on the web link specific circumstances of the business.

Boards often make the mistake of becoming too involved with operational issues which should be left to management, or are not clear about their legal responsibilities for the decisions and actions taken by an organization. This confusion is often caused by not keeping up with the ever-changing demands on boards, or the unanticipated issues such as financial crises and resignations of staff. This is usually resolved by taking the time to discuss the issues facing directors and supplying them with simple written materials and an orientation.

A second common mistake is when the board chooses to delegate too much authority and not be able to review the issues it has delegated. (Except in the smallest NPOs). In this scenario, the board loses its evaluation function and can no longer determine if the operational activities are contributing to satisfactory performance for the entire organization.

The board must also develop an organizational structure for governance, including how it interacts with the general manager or CEO. This includes determining how the board will meet regularly, how members will be chosen and removed and how the board will make decisions. The board must also create information systems that can provide valid data on its past and projected performance in order to assist in making its decisions.


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