Corporate Boards are elected by simply and lawfully obligated to represent the owners of a openly held corporation—the shareholders/stockholders. They are responsible for setting broad desired goals, supporting managing in pursuit of those goals, and determining the company’s strategic direction. They also oversee concerns such as dividends, major ventures, and mergers and acquisitions. The plank must also set up policies, including establishing the hiring and firing of senior managers and determining their particular compensation.
Inside the wake of meltdowns like Adelphia, Enron, and Tyco, gigantic attention was focused on the boards that governed individuals companies. A few critics claimed that the dilemmas were as a result of gross or criminal neglectfulness on the part of the directors. But the truth is that a number of factors contributed to the crises, and several of the complications involved had been beyond the control of any single aboard member.
One thing that separates good boards from undesirable is a concentrate on effective oversight. That includes horizon-scanning, scenario-planning and controlling the C-suite accountable for improvement. The top-performing companies for the 2023 Modern Board 25—which Fortune launched last year to focus on how companies are changing the boards to look similar to F5 and fewer like next page GE in 2001—score loaded with these areas.
Other areas that distinguish wonderful boards include plank expertise, ideally suited size and CEO succession planning. Some companies as well focus on bringing in new expertise to their planks by seeking candidates who have got experience in emerging organization models or perhaps with a particular specialization, such as cybersecurity and digital transformation.