Anticipating Board Evaluation Trends for 2024
Directors - Roles - Snapshot - Knowledge Sharing - Lionheart -
Directors - Roles - Snapshot - Knowledge Sharing - Lionheart -
The Role of the Board of Directors in Corporate Governance
Lionheart Snapshot Series
The Board of Directors plays a crucial role in a company's corporate governance, ensuring its long-term aims are determined, leadership is provided, and a supervisory process is established. They must consider the skills and requirements of each individual member and work together with the CEO to drive the company forward.
The board's effectiveness depends on their ability to drive the company's strategy forward within a framework of accountability and transparency. In Ireland, the US and UK, corporations generally operate on a one-tier board structure, which has a high concentration of power in the hands of the CEO.
To counter this, the Board appoints non-executive directors based on their experience, market knowledge, and openness to question.
The board also establishes the company's culture, values, and ethics, leading by example and ensuring good standards of behaviour permeate all levels of the organisation.
The Chairperson of the board establishes the tone in the boardroom for non-executive directors to raise concerns.
Investors place increased importance on delivering long-term business and economic success, and the board is responsible for developing an appropriate corporate vision, ethics, and working culture.
A performance management and reward system is necessary to encourage behaviour consistent with the company's strategy model and values.
Shareholder engagement is essential for the board's effectiveness, as they provide financial and non-financial information to determine the company's position and prospects.
The Board must also identify the nature and extent of risks facing the organisation and ensure a risk management process, information system, and internal control system. Board evaluation is a valuable feedback mechanism for improving board effectiveness, maximising strengths, and highlighting areas for further development.
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If you require any further information in regard to Corporate Governance please feel free to contact us at admin@lionheart.ie