The effectiveness of the directors of an organization is often affected by their failure to do important things because of a lack of someone or a tool to remind them. A checklist can be developed and applied by the board of directors to remind itself of things to do at the board level. The important things should be those that will affect the performance of both the board and the organization if they are forgotten. A checklist is not a to-do list but a rolling reminder to the board to double-check that all important issues have been carried out. The following are some of the possible key issues that could be included in the checklist;
It is in the best interest of a director and the company to take some time to know each other and to carry out some background searches on each other. This reduces the risk of entering into a contract with a party that does have the right skills, mind-set, morals, culture, experience, and qualifications among others.
There must be a service contract between a director and a company specifying the relationship between a director and a company to provide for smooth relationships. The service contract will contain detailed relationships relating to services, terms and conditions, non-assignment of personal services, conflict resolution, company property in the custody of the director, confidentiality, remedies in case of a breach, fees, and payments among others. The contract protects both parties, minimizes risk, and helps them to understand their rights and obligations.
Mind-set and board culture
The parties have to understand each other’s established set of attitudes in various key areas of business, environment, people, customers, ethical behavior, local and global business, governance, technology, and risk among others. This minimizes the risk of parties entering into a contract when their attitudes toward common issues are not aligned. Where there is misalignment on some key issues, there must be some arrangement on how the misalignment will be dealt with.
The role of new board members is that of leadership and oversight to ensure the company meets its goals and eventually its mission. To perform this role, there must be a formal induction program to provide new board members with the information and support they will require when performing their roles.
Understanding the business strategy
New board members need to understand the business strategy formulation, implementation, and monitoring process. They have to appreciate the current state of the business and the ongoing journey of moving toward the desired future state and how risks along the way will be dealt with.
Board composition and skill mix
The composition of the board should be balanced in terms of age, geography, education and professional training, gender, and sector among others. This gives the board some degree of adaptability to the ever-changing business demands. The board members should have a balanced skill mix that will enable the board to carry out its role of leadership and oversight with minimal capability challenges. Members with the right skills add value to the company and result in attracting the right customers.
The board should develop, implement and regularly review the board charter that defines the roles, rights, powers, and responsibilities of the board and its committees in its leadership and oversight roles. The charter, therefore, specifies the main issues in the board governance framework.
Fixing own agenda
The agenda is an ordered list of items to be discussed during the meetings. The board working in consultation with the chief executive of the company fixes its agenda. Through the agenda, the board will ensure all important issues are included. The agenda helps both the management and the board members prepare for meetings.
Board papers are documents prepared by management to help the board deliberate on issues contained in the board agenda. The board papers give more information to help the board in the decision-making. The board should specify the format and length of the board papers to avoid wasting time and effort reading through unnecessary details.
To improve the performance of the board, a board yearly evaluation should be carried out to assess how the board has performed in various key areas geared at achieving the company’s goals and mission.
If the board evaluation is properly carried out, it will indicate areas of training needs for each director. A yearly training program to address directors’ training needs should be put together, implemented, and monitored.
A checklist must be developed and implemented by the board working together with the chief executive to ensure important issues affecting the performance of both the board and the organization are not forgotten.