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.