The damage from governance failure can be profound, and attract unwelcome media and public scrutiny. Governance is, above all, about people. It’s a team game and, like any team, the board’s composition, its culture and dynamic, are critical to its effectiveness.

Boards need a broad mix of skills and experience and a balanced board supports open debate, diversity, and constructive dissent. Management is part of the wider governance team and this relationship must be nurtured and valued. A board exists to support and guide management, as well as to hold them to account for performance and compliance matters.

The roles and responsibilities of individual directors, the board and management should be clearly understood and recorded. The company’s constitution, a board charter and letters of appointment are all key tools to help set out roles, responsibilities and expectations.

A board must make decisions based on sufficient, accurate, relevant and timely information. It must define its information requirements so that reporting is meaningful, with management providing thoughtful interpretation about key matters. 

Measuring what matters, and providing trend information, has never been more important for an organisation’s core financial and non-financial performance indicators. If the board’s information requirements aren’t being met by management, this should be raised as a priority.

A board, like any team, must focus on continuous improvement to ensure ongoing effective corporate governance. Board and director evaluations help hold the board accountable and improve individual director and whole-of-board performance. 

Evaluation, formal and/or informal, should be undertaken regularly to help boards and directors identify their strengths and weaknesses, assess their performance and determine opportunities to improve. Ongoing director development is a core focus for the Institute of Directors, through resources, courses and events.

At the end of each meeting, all boards should also be able to answer, ‘Did we add value today?'

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