Effective corporate governance is grounded in a clear view of what matters the most to the business, the range of risks facing the organizations, how these risks are related to the business, and its strategic priorities. To mitigate the risks and address complex governance problems, CEOs must tap into the corporate board that comprises a unique repository of strategic leadership experience and industry knowledge.
In this article at Ivey Business Journal, Maureen Bujno and Benjamin Finzi discuss the number of ways CEOs can maximize the value of their companies’ boards.
A Guide for CEOs
CEOs must foster transparency in the expectation they set for interactions between the board and the rest of the management team. Besides, actively engaging with key stakeholders is crucial for successful corporate governance. A CEO that ignores the viewpoints of regulators, business partners, customers, investors, or employees will not succeed over the long term.
“CEOs can help boards develop into more closely woven, interconnected groups by influencing what board members experience outside the boardroom – both as a group and individually,” says the authors. CEOs must focus on thoughtful communication that is beyond merely building an interpersonal bond and sharing information with board members. They must focus on:
- Risk management and crisis preparedness
- Oversight of strategic planning to create long-term sustainable value
- Board succession planning that is aligned with changing circumstances
- Corporate culture and related controls
Oversight of Strategic Planning
CEOs, when evaluating the company’s ability to perform well over the long term, must consider if:
- The board is well-composed, independent, diverse, high-functioning, and experienced.
- Governance structures reflect provisions that empower shareholders and protect their rights.
- There are effective, integrated, and ongoing oversight of relevant industry – and company-specific risks.
Boards often comprise of skilled, creative, and smart people. The more deeply the CEO understands each board member’s personality and experience, the more fruitful the overall interaction with the board will be. If the interactions are positive, it can lead to better decision-making and more strategic outcomes. To read the full article, click on https://iveybusinessjournal.com/governing-outside-the-boardroom/.