Board management principles determine the way a board handles its affairs. They regulate the relationship between a company’s Board of Directors and how it oversees corporate issues that cannot be delegated to lower-ranking officials.
The board is therefore responsible for many aspects that can’t be included in the annual report of a company. The board, for example must recruit and hire the CEO, ensure that the company is operating in its best interest and also communicate any issues that are causing concern to shareholders. The board’s job is to assess the company’s capacity and potential.
Many boards are conducting annual reviews to improve their performance. They can be focused on the board a whole, the board’s committees, individual directors or even the chair.
A common practice is to keep a record of each meetings. This allows the board to understand the impact of its decisions on other people including investors and employees. A well-written document can be a valuable piece evidence in legal proceedings.
The board must also be able discern and evaluate the risk. This includes identifying the firm’s weaknesses and preparing plans to mitigate or prevent them. This includes evaluating the impact of potential changes on the communities and other stakeholders. Furthermore, the board must make sure that it is kept informed of all major developments promptly. For example the board needs to know when CEO compensation is out of control compared to the performance of the company as well as average worker wages.