corporate governance

What Does Good Corporate Governance Look Like?

It’s easy to talk about strengthening your board of directors, but how do you know when you’ve reached a high-functioning level of corporate governance?

In this day and age, building and maintaining a successful board means checking off many different boxes. As the role of the corporate director continues to expand and technology keeps leaping forward, board members should take the time to reflect on their impact as individuals and as a group.

Here are some signs that your board is thriving:

Directors have a firm understanding of their responsibilities

In order to meet (or surpass) expectations, board members must first understand what those expectations are. In a past blog, we outlined the eight basic functions of the board. A board that’s excelling will not only recognize the importance of each of these functions, but it will also have learned how to balance them effectively.

It’s easy for board members to get bogged down in one particular area, say monitoring and evaluating the CEO, but an excessive focus could pull their attention away from things like strategic planning or self-assessment. Once the balance is lost, blind spots can develop.

The board is communicating well with C-suite leaders

Establishing a productive relationship between directors and in-house leadership is one of the surest signs of boardroom success. This doesn’t mean that the two entities have to agree all of the time, but it does mean that the communication channels are open and transparent in nature.

Building trust will help these two groups work together to make and execute the best decisions possible.

The board is collectively active and engaged

Board members won’t approach their individual leadership positions in the same ways, but for high-functioning boards, the important factor is whether each director is thoroughly engaged. Good governance is derived from active participants, so it’s immensely important for directors to be able to easily communicate and interact with their fellow board members.

Boards that have highly engaged individuals tend to be highly engaged as a whole, which leads to more fruitful decision-making.

The board has its sights on the future of the company

Boards that spend too much time looking backwards don’t tend to garner much success. The role of the board is to be forward-thinking—to mitigate risk while taking the necessary steps to cultivate the company’s future possibilities.

Rather than getting bogged down in day-to-day management, high-functioning boards empower internal leaders to guide operations while directors advance the organization through strategic planning.

Posted in Board Membership, General Board Topics, Leadership and tagged , , .