WHAT DOES AN EFFECTIVE BOARD LOOK LIKE
A well-functioning board is a team lead by the Chairman, and an effective board needs to be carefully selected, taking into account group dynamics and the needs of the business.
The board will ensure there is a well refined corporate strategy and clear succession planning.
The Chairman must have an honest and transparent relationship with the Managing Director or Chief Executive Officer, as well as a good knowledge of the business so that s/he can provide a constructive level of challenge to the CEO whilst understanding that s/he is not there to run the business but rather to provide support and guidance.
The CEO is responsible for running the day to day business of the Company, maintaining good communication with the Board and ensuring the Company’s business plan is achieved.
Each Director should be fully aware of Company strategy and Corporate Governance and the reasons why it is appropriate for the Company. An effective Board should not be dominated by one person or group of people but should demonstrate the right mix of sector knowledge, skills and experiences to deliver the Company strategy and create long term value. A well balanced Board will encourage the right behaviour across the whole organisation.
A Board should be balanced between executive and non-executive Directors, and with (at least in bigger companies) at least 2 independent NEDs. These independent NEDs are important because they provide objectivity and bring a wider experience to the Board which enables the directors,
if necessary, to challenge the executive Board and provide a commercial reality check.
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