Board of directors play a crucial role in the management and oversight of organizations.
To effectively fulfill these responsibilities, there are three essential priorities on which a board of directors should focus: strategy, risk management, and governance.
1. Lead and Monitor: Strategy and Accountability Framework
The first task of the board of directors is to clarify or confirm the organization's mission and performance indicators to ensure effective and efficient implementation.
This includes
establishing or confirming the organization's strategic vision,
performance indicators, and targets.
The board should also establish accountability parameters to maintain reasonable assurance that things are going well.
Some examples include
the accountability framework for the management,
effective reporting tools,
concise and understandable financial reports,
a dashboard of strategic and operational results.
It is essential for the board to maintain a high level of competence to monitor the overall results of the organization.
This can be achieved by developing a skills matrix for board members, which helps in recruiting individuals with the desired and required expertise.
It is also important to have a rigorous selection and appointment process for executive positions.
Examples:
To ensure good financial oversight, the treasurer should possess expertise in finance.
It is wise for the board chair, who is usually responsible for overseeing the management, to have a certain level of management skills.
2. Protect: Risk Management and Analysis of Needs and Satisfaction
Risk management is a crucial element for the protection of the organization.
The board of directors should establish a risk management framework to
identify,
evaluate,
and mitigate the risks faced by the organization.
It is also important to ensure verification of controls, as needed, and closely monitor the organization's finances.
Reminders:
It is the responsibility of the board of directors to
ensure the use of recognized accounting systems for financial management and bookkeeping,
ensure an annual audit or review engagement,
receive an annual budget for review, and timely budget revisions.
Another aspect of protection is organizational listening. The board must ensure the involvement of all internal and external stakeholders. For this, permanent consultation structures are established, such as
satisfaction surveys,
advisory committees,
community consultations,
and focus groups.
This allows for the analysis of stakeholders' needs and satisfaction. Actions of the organization can then be adapted accordingly or based on trends, if applicable.
3. Govern: Manage Operations with Diligence and Efficiency
To ensure a culture of accountability towards the organization's stakeholders, the board of directors must choose its governance model:
management-oriented,
results-oriented,
or purpose-oriented.
This choice is made based on its reality and specific situation.
The following elements can be criteria:
overall budget,
scope of programs and services,
presence or absence of employees,
presence of a CEO,
presence of departments.
According to the chosen model, the board must establish a system to ensure the smooth functioning of the organization.
This includes, among others, describing
the tasks of board members and executives,
mandates of various board committees
finance,
governance,
evaluation and CEO oversight.
To ensure optimal functioning and promote a culture of continuous improvement, both organizationally and in terms of governance, it is essential to evaluate the performance of the board, executives, and board members.
This evaluation helps identify strengths and weaknesses of the group and individuals in order to make necessary adjustments.
Finally, the board must maintain an effective and balanced governance schedule, ensuring that meetings and important decisions are consistently planned. The use of cloud technologies for document management, such as governance portals like Boardable and Diligent, or software for document sharing like Smartsheet, OneDrive, Sharepoint, and GoogleDrive, can facilitate this process and ensure proper information traceability.
In summary, boards of directors should focus on strategy, risk management, and governance. By focusing their efforts on these three essential priorities, they can effectively contribute to the success and sustainability of their organizations.
For further information
Free Trainings
The Roles And Responsibilities of a Board of Directors, Its Officers, And Directors: Understanding Who Must Do What to Meet Their Collective And Individual Responsibilities
Personalized governance support
The role of the board chair in maintaining team cohesion
Governance policies and procedures
Establishment of a governance, operations, and compliance committee.
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