The board's job is to provide direction and oversee the executive management team. It ensures that the company's policies are followed and that all fiduciary obligations are adhered to. While some boards entrust too much power to their executive leadership however, the majority do not go far enough. The media is brimming with stories about business failures caused by incompetent or corrupt management teams.

To avoid such disasters To avoid such catastrophes, it is important to ensure that your board includes many perspectives and capabilities. It must also function effectively as a team. This is why you should establish certain management principles for your board including accepting diversity when creating your board and taking on leadership roles, fostering an agile structure (e.g. creating committees to address the new dangers) and ensuring ongoing review of the board as read more a whole and individual members.

Another key principle for a board of management is to not get too involved in operational issues, particularly when dealing with the day-to-day activities of your business. The primary role of a board is to determine the long-term vision for your company and its place in society.

While this may sound like a no-brainer, many companies struggle with this concept. For instance the board members may begin having direct meetings with management without consulting the CEO, or jump to conclusions in the hope of being helpful. This could put the CEO in a precarious spot. The CEO should collaborate with the chairman of the board and other directors to address the issue and regain trust.