Corporate Governance Tips for a Strong Board

When it concerns corporate governance, it is important to ensure that your board is following the best practices to achieve success. It’s not enough to check the boxes or adhere to the minimum standards. A well-run board must constantly analyze its own performance to discover ways to improve. The best boards are those which excel in this particular area.

A good governance practice is to ensure that shareholders know the roles, responsibilities of the board and responsibilities. This includes explaining the alignment of the compensation of the board with the goals of the company and defining what constitutes a successful system of oversight and checks and balances.

A clear plan for managing the risks of the business is also important. It is crucial to be aware of the risk profile of the company as well as the short- as well as long-term, and work together with the board on the way it will evaluate the risks. It is also essential to ensure that the board has the tools necessary to recognize potential risks. This is a part of internal factors such as cultural rules and poor communication among directors.

Being aware of shareholders’ concerns is equally important. Encourage engagement. This is especially important in the current environment of increased shareholder activism. Boards should, for instance, work with shareholders in order to determine and address any issues among shareholders before the start of the proxy season.