Corporate Governance Tips for a Strong Board

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When it comes to corporate governance you’ll need to ensure your board follows best guidelines for success. However, it’s not enough to simply tick the right boxes and meet the bare minimum regulations. A well-run board must constantly evaluate its own performance in order to find ways to improve. The most effective boards are ones who excel in this area.

One of the most important best practices for governance is to help shareholders to be aware of the board’s role, responsibilities, and accountability. This includes explaining the alignment of the compensation of the board with the company’s objectives and defining what constitutes a successful system of oversight and checks and balances.

Another essential element is having an established framework for managing the company’s risks. This means developing a knowledge of the company’s short and long-term risk profile, and working together to determine how the board will evaluate the risks. It is also about ensuring that management and the board are equipped to recognize risks, including internal factors such as cultural norms or lack of communication between directors.

It’s also vital that you listen to shareholder concerns and encourage engagement. This is particularly crucial in the current environment of increasing shareholder activism. For example, boards should work with shareholders to recognize and address discontent from shareholders well before the time for proxy season.

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