Why is it so crucial for modern boards of directors to think about their effectiveness? How to improve the efficiency of the board of directors? This article will answer these questions and explain how to simplify board governance with the help of board software.
How to simplify board governance and compliance management?
We all live in a new reality. Changes are happening very quickly, new technologies are emerging, and the level of uncertainty is increasing every day. Planning horizons are shrinking, and strategies written for 20 years ahead are losing relevance. The methods of competition that existed before ceased to work. What made companies successful in the past no longer guarantees them success in the future.
In such a turbulent environment, companies’ future will increasingly depend on the decisions made by boards of directors, their ability to catch trends, notice changes in the external environment promptly, assess risks and see opportunities. The tasks of the modern board of directors are formulated much more broadly than in previous years. Shareholders, investors and stakeholders expect the board of directors to create added value for the company and ensure its long-term sustainable development. Such expectations, in turn, are a big challenge for the boards, forcing them to think about their performance and ways to improve it.
Board effectiveness checklist
Here are typical steps the boards can take to improve their effectiveness. So, let’s consider the board effectiveness checklist:
- Balanced composition
An effective board of directors is, first of all, a professional with knowledge, skills, experience and qualifications on issues within the competence of the board of directors. Traditionally, boards of directors require qualifications, experience and skills in strategy, audit, finance, human capital management, risk management and corporate governance. People with good industry experts are always in demand on boards of directors.
One of the main qualities of an effective board of directors is its ability to conduct a constructive discussion, discuss different points of view, and analyze various options for decisions and their consequences. Members of the board of directors should differ in professional qualifications and demographic characteristics – gender, age, and nationality.
- Creating committees
The board’s effectiveness will increase if special committees are created in it. They will serve as a bridge between the board and top management, and independent directors will be able to delve deeper into business issues. It makes sense to create a strategy committee and a committee that will analyze current activities (to improve the efficiency of existing business processes, etc.).
Board portal – a perfect way to increase board effectiveness
The high-quality work of the board of directors should be ensured by each director’s access to relevant, complete and up-to-date information about the performance of the company and the presence of possible risks. For this purpose, the board management software was designed. It is a SaaS solution with a secure background for a reliable data warehouse and productive collaboration of collegial bodies. The software serves for organizing online board meetings. So, if the company wants to improve the practice of preparing and holding meetings of the board of directors, it is necessary to establish optimal terms for receiving notifications and materials for meetings, provide an opportunity to express a personal point of view on the agenda of the meeting, resolve the most critical issues in person, etc. The board management software can solve all these issues.