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The main board’s task is to participate in the improvement of corporate governance practices. This article will analyze the best ways to increase board governance productivity.

The foundations of corporate governance and the role of the boards

Corporate governance as a system of relationships in the well-known triangle of “shareholders – board of directors – management” is the basis for ensuring the company’s effective operation in the medium term and for successful strategic development.

Corporate governance is objectively located at a higher level in the company’s management system and covers a wide range of relations, including not only the structure of management bodies but also all interested parties, and ensures the management of the corporation in the interests of its shareholders.

The board of directors monitors the business and does not participate in the practical work of the company, trusting the general director.

Basic principles to improve board governance

Some important principles can significantly improve the board’s governance:

• Development of corporate culture

It is important that members of the boards of directors not only develop the principles of corporate culture but also follow them themselves. Both members of the boards of directors and top managers are required to explain to employees the essence of the ethical standards adopted in the company. And, most likely, after the recent scandals in big business, which served as a lesson for violators of business ethics, employees will support the desire of their leaders to raise the profile of moral principles.

• Monitoring of business activities of a company

Another important task of the board of directors is to ensure that the corporation’s performance meets the shareholders’ expectations. And for this, the boards of directors must receive reliable, independently reviewed information about the company’s financial position.

• Effective risk management

The company’s management must be clear about the risks associated with its business. To determine the totality of risks and the value of each separately is one of the most important strategic tasks of the company. Therefore, it should be decided at the top – the general director and the board of directors.

• Implementation of the control strategy

Managers cannot be held accountable for a corporation’s bottom line if the board of directors is not involved in developing corporate strategy. Boards of directors should outline the overall contours of the business, protect the shareholders’ interests and manage the strategy’s implementation, but not implement it. It is very important that board members develop close relationships with top managers and periodically discuss key business issues with them, such as competitive advantages or market trends.

Board software: how to enchase the board’s efficiency?

When holding board meetings, virtual board software technologies can be used to ensure the possibility of remote participation in the meeting, discussion of agenda items without being present at the place of the event, and making decisions on issues put to the vote by filling out an electronic form of the ballot. Board management software is a digital platform that ensures various tools for secure collaboration and a reliable data repository for confidential documents.

The electronic boardroom repository keeps marketing, commercial and technical documents in perfect order, providing quick access to all business-critical materials. Integration with information systems allows you to create a single information space for the entire organization. The system is accessed via a web interface, which is especially important for organizations with a geographically distributed structure. The most significant business benefit from board activity automation is the elimination of paper copies of documents.

The position of the head of the company provides great opportunities and requires increased responsibility. This article will consider the primary duties and obligations every director should know.

The role of the director of the company

The director or leader is the brain of a large team, the engine of the entire team, and the organization’s captain. His most important function is to develop the organizational structure. There are several standard organizational structures from which he chooses the one that suits his company. However, regardless of the chosen organizational structure, the director needs to develop regulations, prescribe business processes, set goals and objectives and take measures to provide the company with all the necessary labor and material resources.

The director of an enterprise is an employee with very broad but still limited powers. Along with broad powers, he is endowed with serious responsibility:

• for company property;
• for decisions made by him within his competence, and the consequences of these decisions;
• for the results of the financial and economic activities of the company.

What is the director responsible for?

So, let’s analyze the top 10 most important duties and responsibilities of the director in more detail. They are as follows:

1. Creation of an ideology. The director is responsible for formulating the main goal and intention, their preservation, and promotion to support the ideological basis of the activity.
2. Organization of execution. If you want the work to be done with the proper quality and within the required time frame, you must pay close attention to the organization of this process. All these procedures must be consistent with the content of the task itself and the timing of its implementation.
3. Distribution of duties. This part of the leader’s work is the most understandable in its content. One of the reasons for the overload of managers is that the leader does not distribute responsibilities.
4. Ensuring interoperability. Employees need regular contact with the head. In addition, subordinates need to interact with their colleagues on a “horizontal” level, both within their structure and with access to other departments.
5. Building interpersonal relationships. Depending on the goals and nature of the tasks facing the company, one or another type of relationship in the team can be both good and bad. This parameter is relative and depends on how these relationships contribute to effective work. The leader must maintain a proper balance between cooperation and rivalry in the team. Interpersonal relationships are not a given but a controlled substance.
6. Analysis of results. Any results seem to be optimal and the only possible ones. Although this habit sometimes spoils the mood, it significantly increases management efficiency.
7. Process efficiency audit. The manager is obliged to measure and evaluate the correctness of the work organization, correlate this with key performance indicators, and, in case of discrepancy or forecasting such a possibility in the future, ensure the development of the necessary changes.
8. Finance and assets. The director controls the rational and efficient handling of monetary and tangible assets.
9. Organization of strategic planning and management. He should ensure that the company develops in a controlled manner and achieves an intermediate goal.
10. Appointment to the post and control of the activities of company executives. To truly be a business owner, you must perform the appropriate functions. Otherwise, the company may become “nothing.”

When registering a nonprofit organization and developing its constituent documents, the most important thing is to form the structure of the governing bodies that meet the requirements of the law. So, what are the legal responsibilities of the board members?

The board of directors in the nonprofit organization

Nonprofit governance refers to the practice and process of providing leadership to the members of a nonprofit organization (NPO), helping to guide it towards achieving its goals. Governance often appears in this context as a board of directors, usually known simply as a board.

The nonprofit board is the governing body of an organization established for purposes other than generating income. The council’s function is not to manage the organization’s day-to-day operations but to oversee its higher-level problems. The board’s scope is related to the organization’s mission and includes the development of initiatives and strategies for its implementation. Governance, in contrast, is the jurisdiction of volunteers or paid employees and includes the fulfillment of a mission defined by the board.

The main value of the board is that it is a collegiate body. The board represents the interests of the NPO’s many stakeholders, and this collective leadership helps the organization stay true to its mission and oppose the interests of particular groups or individuals. In this sense, the board complements the head of the organization, who brings his talent, charisma, vision, and influence to leadership.

Collective leadership also has practical advantages. Since the board is still a group, compared to the sole leader, he has wider horizons and richer experience. At the same time, being a single body, the board forms a common opinion from many points of view, thus acting as a unifying force of the organization.

Legal responsibilities of NPO board members

Although the board members act as part of a common collegiate body, they also have personal responsibilities. Board members are expected to attend meetings regularly, participate actively, and put NPO interests ahead of their own, professional or corporate. A detailed list of board members’ responsibilities can help them better understand their role and how best to fulfill it.

The description of duties should include the following items: 

• know and support the mission of the organization; 
• regularly participate in meetings of the board; 
• prepare in advance for meetings;
• observe confidentiality; 
• offer reasonable and unbiased recommendations; 
• avoid conflicts of interest and not impose their agenda; 
• participate in the work of committees and special events; 
• support the leadership of the organization; 
• participate in the development of the resources of the organization; 
• promote the organization in the community.

In addition to the main ones, the board can delegate some specific responsibilities to its members. For example, a finance expert may be authorized to oversee the preparation of an organization’s annual budget, or a lawyer on the board may be assigned to manage the legal affairs of an NPO. The granting of such powers must be approved by the board and cannot be automatically extended to board members on a professional basis. In addition, it is impossible to limit the duties and powers of board members only to services in their professional field. The first and most important duty of every board member is to contribute to the collective decisions of that body.

All structures of NPOs must exercise their functions solely in the interests of the organization. Otherwise, they can be subjected to disciplinary or material action to compensate for the losses incurred.