As you know, the board of directors is a collegial management body which includes highly qualified independent directors. How to stay in compliance with the law in Board Governance? Check in the article below.
How to Stay in Compliance with the Law with the Good Board Governance?
Business owners often fall into the trap of asking people they know to sit on their boards of directors. Instead, it is important to look around and get to know as many candidates as possible in order to choose the best option in the future. Business does not stand still. It is constantly evolving; companies compete with each other in all areas of activity. More successfully than others, those companies that have realized the need to automate their business processes are developing and conquering markets in time.
Appropriate independent directors need to be selected. It is optimal for directors to have not only industry expertise but also managerial competencies (for example, in the field of strategy, finance, etc.) and entrepreneurial skills. Personal qualities are especially important: the willingness to get involved in the nuances, the ability to withstand pressure, etc.). The main thing is not to choose according to the principle of “one candidate from the only one possible,” but to consider several candidates for each position. The activity of members of the board of directors requires the shareholders to trust them and exclude the possibility of pressure on them in order to make certain decisions.
When evaluating the board of directors, the following components should be taken into account:
- goal – the purpose and priorities of the work of the board of directors;
- process – effective and efficient rules and procedures, as well as legal compliance;
- people – the atmosphere in the board of directors, competencies, knowledge, and experience of the members of the board of directors, balanced composition, and diversity of points of view;
- chairman – professionalism of the chairman and support for effective interaction within the board of directors.
Why Do You Need Board Governance at Private Companies?
In the past years, company leaders have mainly devoted themselves to the fight against the pandemic. For many of them, the question of business survival has overshadowed carefully thought-out strategies. For example, 59% of Board Governance and other senior executives of companies who took part in the study on long-term value and corporate governance reported that the pandemic made it difficult for them to focus on long-term growth.
The main recommendations why the Board Governance is needed by private firms are:
- To increase the competitiveness and efficiency of the company, to strengthen strategic competencies within the company.
- To attract an external view, fresh ideas, and solutions, and professional contacts to reach a new level of development.
- To create a transparent and understandable corporate governance system and attract external financing.
As a result, the company does not get the maximum return from the Board Governance, and the manager, trying to defuse the atmosphere and improve relations with the subordinates, spends almost all of his time on the conflict. He worries that other employees will consider him inattentive and cruel and will feel sorry for his colleague. Such problems arise even for very talented leaders. How to find a way out? To solve a problem, you must first acknowledge its existence. Managers must remember that it is they who, through their behavior, shape the attitude of subordinates to work.