Effective Operations and Best Practices of the Board and Board

Committees

Best Practices for Board Committees || January 10th, 2019 || Nicholas J. Price
 A board’s needs are ever-changing. Accordingly, the work assignments for committees
need to be flexible and change as often as necessary to keep committee work aligned with
the board’s strategic priorities.
 Keeping up on committee objectives requires boards to periodically evaluate whether the
committee’s instructions are clear and relevant and to ensure that they don’t overlap with
other committees’ responsibilities.
 Some boards function best with a process of rotating board directors through various
committees, so they gain a greater understanding of each committee’s work.
 Others retain the same members on committees so that they develop a deeper level of
expertise in the committee’s area of work and become an integral part of helping the
committee reach its goals.
 To fulfill the Duty of Care, boards must meet the growing pressures by legal and
regulatory authorities. It’s crucial in today’s climate for boards to take a proactive
approach by placing a heavier focus on committees’ work and how committees
interconnect with other committees, rather than forming committees as a matter of
routine.
 Forming sub-committees is a good way for committees to tackle highly specific work.
Sub-committees can be instrumental in making committee work manageable.
 Boards usually have a few standing committees and form ad hoc committees as needed.
Ad hoc committees meet for a shorter period and they’re charged with working on
specific issues.
 To save valuable board time, board committees that haven’t taken any actions and don’t
have crucial information to report may opt to file a short, written report of the
committee’s work and have it included in the board meeting materials.
Source: https://insights.diligent.com/board-committee/best-practices-for-board-committees
5 Best Practices for Effective Board Management
1. Clearly separate the role of the board from the CEO’s ability to run the organization.
 The board of directors provides oversight and input into an organization’s progress.
Meanwhile, it is the CEO who is busy moving the company forward with day-to-day
affairs. Keeping that in mind, boards of directors must be prudent in allowing the CEO to
handle day-to-day affairs while keeping an eye on the organization’s trajectory over time.
Likewise, the CEO must be open and available to answer questions from the board when
trends (positive or negative) are noticed.
2. Keep your board of directors’ objective by only including outside parties in decision-
making
 The role of the board is to be an impartial and objective body. Boards can run the risk of
biases or conflicts of interest by including organization executives, since there are
situations where those executives might have direct stakes in one kind of decision versus
another.
 Those stakes may not even be financial: boards must sometimes decide on items like
organization hierarchy or power structure, timing of projects, budgets.
3. Connect board members with outside investors/stakeholders
 All organizations are supported by an outside network. Large companies rely on
investors, nonprofits rely on donors, and all organizations have stakeholders who are
involved as partners, volunteers, or even customers. Modern companies are expected to
be transparent about their values, operations, and their responsibilities to stakeholders.
 One of the easiest ways to make stakeholders feel involved is to include them in meetings
or designated communications. Those stakeholders want to be a part of the organization’s
mission, and empowering them to do so makes your organization’s network stronger.
4. Make risk management a pillar of your strategy
 It is the board’s role to account for potential risks an organization may face, and prepare
contingencies against those risks. If strategic thinking and taking risks drive progress,
strategic defense and risk management are the safety nets. Both are essential for a
company to thrive and continue thriving, especially in the face of modern challenges.
5. Have a diverse pool of talent, and keep your board members busy
 It should go without saying that diverse talent on a board of directors leads to more
specialized insight into a wider variety of topics. That diversity should come through
finding people from different professions, from different ethnic or cultural backgrounds,
from different genders.
  Board leadership needs to be aware of what talents are required, when, and should
regularly evaluate if their current board demographics fit the organization’s need at any
given time.
 A highly effective and efficient board should be running at full speed at all times. That
means each director has an appropriate amount of responsibilities, clear deadlines, and
has progress regularly monitored by leadership. As a board’s needs change, or priorities
shift, new board members or outside talent can be recruited to fulfill needs and
accomplish strategic goals.
Source: https://landing.directorpoint.com/leadership/board-management/
BEST PRACTICES FOR MANAGING BOARD COMMITTEES
Jun 15
1. Make sure every committee is necessary.
 Each committee should have a material impact on the board’s success. It is more efficient
to assign the responsibilities of that committee to one or two members of the board or
place them within another committee’s purview.
 Additionally, make sure each committee is the appropriate size. If it is too big, you may
be wasting members’ time that could be spent sitting on a different committee or serving
another purpose for the board.
2. Ensure that each committee has a clear purpose.
 Each committee should be distinct and focused. Defining a very clear purpose will help
the committee to actually fulfill its duties and will ensure that multiple committees do not
duplicate their efforts. Set clear policies and procedures and make sure members are
consistently on the same page.
3. Appoint strong leadership and choose members wisely.
 The head of the committee should be an active board member who is knowledgeable
about the subject of the committee. Because boards may be limited in size, it’s not always
possible to stack each committee with the board’s strongest leaders, but make sure that
the members of the committee will respect and follow their head. Additionally, pay
attention that committee members aren’t serving on too many committees at once – more
than two will likely inhibit their participation on each.
4. Perform regular self-evaluations.
 Conduct annual self-evaluations. Assess strengths and weaknesses, areas for
improvement, and future action needed. Together, come up with solutions to any
problems that arise, and if there are no glaring issues, brainstorm ways to further
strengthen the group.
5. Run effective meetings.
 Meetings should be like committees – strictly necessary and focused. Make sure that
meetings focus on decisions rather than updates. Always have a clear agenda, and leave a
short period time at the end of the meeting for discussion items that arise last minute. Be
strategic about frequency
6. Keep in touch between meetings.
  To keep meetings efficient, members must stay up-to-date during a hiatus. Post updates
on a discussion board, connect with members via direct message or email and track tasks.
It’s also good to send out the agenda, along with any major updates, before each meeting.
7. Communicate efficiently with the rest of the board.
 Share items that actively affect the board’s goals or that will have an impact on other
committees. Transparency is more important than ever, particularly within corporate
entities. Clear policies and procedures help inform the committee about its
responsibilities to the board and to the public.
8. Keep accurate records.
 This is key to communicating well with the rest of the board. You need to have records of
the committee’s activity, especially if there were private discussions or decisions. This
helps keep all activity above board, and on a practical level, it ensures that members stay
informed. It will also help you make accurate evaluations and will allow you to track the
committee’s progress over time.
9. Don’t be afraid to change direction.
 If a committee is not serving its mission, making progress, or working as a team, it’s
important to change strategy and take different action. Sometimes this requires you to
replace the head of the committee or move members around. Try to re-assign members to
committees in which they are better suited rather than simply removing them.
 Additionally, be prepared for a natural amount of turnover. This is where proper record
keeping comes in handy—new members can quickly assimilate when they have all
necessary information.
10. Stay positive and focused.
 Committees are notoriously unwieldy, but yours need not be. By implementing some of
these best practices, you can make a significant impact on your board’s success, the
organization you serve, and your community.
Source: https://boardmanagement.com/blog/best-practices-managing-board-committees/
The 10 Best Practices For An Effective Board || Nov 25, 2015 || Robert Reiss
1. The better step is to create a lead director who is the board liaison with the CEO and helps
other directors understand their roles. Additionally, he or she can act as a moderator if friction
arises amongst strong willed board members.
2. The board should provide judgment on major issues and shouldn’t try to run the day-to-day
business of the company.
3. They should take time to think before they talk.
4. A group of board members that are truly independent and selected by a truly independent
group. Express the true view to the board.
5. The interaction of the large shareholders and the board members should be more frequent.
There should be more direct engagement instead of fighting and blowing away legal and
accounting money.
6. The CEO should never feel suspicious that the board member is going behind his or her back.
7. Achieving the best practices in board size by choosing the exact number of board members
fitted to be in a specific company. Keep the maximum number of board members busy enough to
distribute equal workload. You don’t want someone to be chairman of all the committees or be a
member of all and have some other people who are not.
The lead director has a very important role. He should be the conduit with board members to
help get the most out of board members
8. It takes a few years to learn to be a board member, but board members should not remain on
their position for the rest of their lives. Learn to slow down. 10 to 15 years is a good experience.
9. A director should have a good judgment to know when to push and when to lay back. He or
she has got to be a cooperative individual who can benefit, who can grow by interaction with his
or her fellows. He's got to be strong enough to keep the CEO on the straight and narrow, but not
be interfering.
10. Open the door to possible missteps and miscalculations and takes the CEO away from his
true job, which is growing a company long term. CEOs who push too hard for earnings growth
risk serious liabilities – civil or even criminal.
Source: https://www.forbes.com/sites/robertreiss/2015/11/25/the-10-best-practices-for-an-
effective-board/?sh=7c208271413b
Best Practices in Board Governance
SEPTEMBER 26, 2013

Key best practices the board should adopt and follow to ensure it is governing appropriately.
Recruit Board Members Effectively and Honestly.
 Ensure consistent information about your board by developing a recruitment packet that
includes vital information about your organization.
 Use board job descriptions that clearly outline your expectations of the time, talent, and
treasure each board member should bring.
 Establish a nominating committee that recruits the skills required to operate an effective
board, not just the status quo.
 Ensure against conflicts of interest when recruiting new board members.
Train and Orient Board Members. It’s not fair to expect that board members will
understand their roles and responsibilities without a thorough orientation that includes, at
least:
 History of the organization and its key accomplishments.
 Legal and fiduciary roles and responsibilities of board members.
 Review of financial statements and how to read them.
 The annual strategic plan of work.
 Board and organizational policies and procedures.
Make Effective Use of Board Member’s Time, Talent, and Treasure.
 Hold effective meetings with an agenda that is focused on what needs to be accomplished
on the annual plan of work
 Create committees that are required to accomplish the annual plan of work. Hold the
committees accountable with written reports. Do not discuss committee work at a board
meeting unless there are critical committee issues that require board action or discussion,
such as a change in budget or change in the committee’s action plan that requires board
approval.
 Use Robert’s Rules judiciously to keep the business of the board moving.
 Take good minutes that reflect the decisions made…and stick to them.
Allow Board Members to Resign When Ready.
 Use annual commitment letters that allow every board member to re-assess and confirm
their ability to serve and commitment to make an annual financial contribution.
 Include an “escape clause” that allows the board chair to accept the resignation of anyone
who does not sign the annual commitment letter.
Hold Annual Board Performance Evaluations.
 As part of the annual planning session, the board should evaluate its performance within
best practices and plan to enhance and improve its governance.
 Use a prepared assessment template or create your own.
 Review the IRS Form 990 for what is expected of board governance.
 Include assessment of:
1. Governance and oversight
2. Fiscal and financial policies and procedures
3. Budgeting and finance
4. Fiscal controls
5. Strategic planning
6. Personnel policies and procedures
7. Management and administration
Clarify the Roles and Responsibilities of Board and the Executive.
 Ensure open and honest communication about board and staff expectations.
 Clarify HR policies and procedures.
 Clarify governance versus operation and management roles.
 Guard against micro-management of staff.
Source: https://institute.uschamber.com/best-practices-in-board-governance/
Corporate Governance Best Practices
Want to Optimize the Effectiveness of Your Board?

Boost board performance with corporate governance best practices

 Corporate governance best practices offer guidelines for board members to be most
effective in bringing strategic value to their organizations.
 Board chairpersons and members help ensure the board plays a key role in their
company’s success when they develop strong understanding of, and successfully
implement, corporate governance best practices.

List of Best Practices:

1. A coherent business direction

 Successful boards need to provide a strong leadership structure and company
management need to set clear, common goals to move in the same direction.
 Corporate governance best practices formally establish goals, ensure support by top
levels of management and board, and clearly communicate to stakeholders.
 Corporate governance best practices designed to ensure coherent business direction will
eliminate inefficiencies and ensure the confidence of stakeholders including
shareholders, employees and customers.

2. Strategy
Coherent goals are useless if no thought is put into getting there. The board can help a
company reach its goals by ensuring effective strategy through corporate governance best
practices. Questions to ask include:
 Are corporate governance strategies aligned with stated goals?

 Are appropriate resources available to implement corporate best practices?

 Do strategies account correctly for the internal and external environment, including
obstacles and opportunities?

 How is risk managed?

  Is the corporate structure suitable to best practice strategies?

Corporate best practices should be implemented through formal processes and then continually
evaluated against pre-determined indicators. Finally, transparent reporting is necessary for
stakeholder trust and legal requirements.

3. Corporate responsibility
Corporate governance best practices that address corporate responsibility and sustainable
business development will help secure your business’s long-term future – and make your
company a part of solutions to pressing human challenges.

4. Accountability
Boards are critical to ensuring the accountability of a business. Corporate governance best
practices can help boards develop and ensure transparent reporting procedures. This includes:
 Use of performance metrics

 Clear communication to stakeholders

 Conflict mitigation strategies

 Ensuring fulfillment of regulatory, compliance and disclosure requirements

Naturally, your accountability and regulatory landscape will vary according to your business’s
field of activity, but you can ensure your accountability and transparency measures are
irreproachable by adhering to corporate governance best practices.

5. The role of corporate governance training

The best training helps you better understand the active role of boards in contributing to the
company's success, perfects your knowledge of corporate governance best practices, and
integrates them into board activities. Programs addressing board governance best practices can
also help ensure cohesion in a board of directors.

Source: https://www.imd.org/hpb/corporate-reflections/corporate-governance-best-practices/