Corporate Governanace: 5 Point Checklist in Creating an Effective Board

Peak Performing Governance Teams: Creating an Effective Board/Superintendent PartnershipThe function of a board is very comprehensive. In practice, it could be said that the board is responsible for laying down matters of principle and of accounting, statistical and management procedures. It is also responsible for the decision of what product to make, which market to penetrate, determination of manufacturing capacity, investment decision, cash flow, liquidity etc. In summary, the directors are responsible for ensuring that the top management functions effectively and that through the information system, proper reports are generated and information is made available for both control and planning purposes.

Ideally, the board of directors should be the heart and soul of a company. Whether a company grows or declines depends very much upon the sense of purpose and direction, the values, the will to generate customer satisfaction, and the desire to achieve, develop and learn, that emanates from the board and the extent to which it is visibly committed to them.

Creating Effective Boards for Private Enterprises: Meeting the Challenges of Continuity and Competition (Jossey Bass Business and Management Series)
The efficient board should be the one which is willing to identify, discuss and tackle barriers to its own contribution. The board can be constrained or enhanced by the limitations or strengths of its individual members.
While effectiveness may be influenced by a number of factors, the following provide a model checklist:
  1. Do the board members share a common, clear and compelling vision? Are they committed to an agreed and realistic strategy to the achievement of the vision?
  2. Have the necessary resources, processes, role, competencies, enabling technology and learning capabilities for successful implementation been assembled?
  3. Whether special responsibilities for projects that stretch beyond a financial year, such as strategic business developments, entrusted to select directors?
  4. When the company expands into a international network, whether the governance needs of the new style entity are given a fresh look?
  5. When the role of chairman and the CEO are separated, whether there is mutual trust and respect to supplement and complement each other’s responsibilities and contributions?