Legally boards are required by law to ensure that a company succeeds in its mission and has a well-thought-out plan of action and doesn’t fall into financial or legal problems. However, how boards get involved in these responsibilities can vary dramatically and is highly dependent on the particular circumstances of the business.
Boards frequently make the mistake of becoming too involved in operational issues that should be left to management or are unclear about their legal obligations for the actions and decisions taken by an organization. This confusion is often caused by a failure to keep up with the evolving requirements of boards or unexpected issues such as financial crisis and resignations of staff. It is often resolved by taking time to discuss the challenges facing directors and supplying them with simple, written materials and an orientation.
Another common mistake is that the board over-delegates its power and chooses not to look into the things it has delegated (except in the smallest of NPOs). In this situation the board loses its evaluation function and cannot assess whether the operational activities contribute to a satisfactory performance of the company.
The board also needs to develop an effective governance system, including how it interacts with the general manager or aprio board management software CEO. This includes setting the frequency of meetings and how board members will be selected and removed, and how decisions will be made. The board also needs to develop information systems that offer data on their past and expected performance in order to assist them in making decisions.