The professional management stage in a company also requires a professional board of directors. In this article, we will analyze what are the main factors that determine the effective board of directors.
An effective board of directors: a new look
In many countries around the world, the activities of boards of directors are undergoing significant changes. Against the backdrop of global challenges faced by the business community everywhere, the effects of the financial crisis in many regions have forever changed the role of directors, and in some cases the understanding of where they can be most effective. However, change often comes with new challenges and questions, and how directors deal with them implies the effectiveness of their activity. Some of these qualities are determined by who exactly serves on the board of directors and what contribution these individuals make to the common cause. Others refer to the processes and technologies councils use to plan activities.
Although the model of effective advice may seem complicated, in fact, it is not. It is based on the idea that it is the decisions of the board of directors that determine the effectiveness of the company, and although the procedure for making decisions depends on many factors, the main condition here is the competence and behavioral characteristics of the board members and how they interact with each other.
Inspiring tips for successful boards
Boards of directors are small decision-making centers that collectively determine the fate of a corporation by making decisions. Whether the board works well and makes good decisions or the board is dysfunctional and makes bad decisions depends mainly on how the board members cooperate.
Thus, we have prepared 4 inspiring tips for improving boards` collaboration:
- Composition of the Board of Directors
The work of the board of directors very rarely involves the presence of audit, compensation and nomination, and corporate governance committees on the board of directors. For the effective organization of work, given the extensive competence of the board of directors and how rarely (only 5-9 times a year) it meets, committees are created as part of the board of directors, which include only a part of the directors.
- Professional development of management as a key function of the board of directors
To substantially increase their involvement in strategic direction, management oversight, boards of directors need to prove to control shareholders that they can contribute to the creation of economic value. To this end, members of the boards of directors should master and actively use new effective practices, technologies, and tools for analyzing management problems and finding solutions to them.
- Organizing a secure online collaborative environment for better productivity
The board portal helps members of collegiate bodies of large distributed organizations to make quick and, at the same time, balanced decisions remotely and control the progress of their implementation. The software is aimed at increasing the efficiency of the work of collegial bodies in terms of organizing meetings in electronic form with the possibility of remote participation from anywhere in the world. It provides full protection of information from unauthorized access following domestic cryptography standards (more).
- Organization of interaction between top management and the board of directors
The main obstacle in the organization of interaction between top managers and the board of directors in Russian companies is the lack of a clear separation of the competencies of the board of directors and the general director, which entails a decrease in the efficiency of the functioning of both corporate governance bodies.