Corporate Governance Tips for a Strong Board

When it concerns corporate governance, it is important to ensure that your board is following the best practices for success. It’s not enough to simply tick the right boxes and follow the minimum standards. A strong board should constantly analyze its own performance to identify ways to improve. This is how the best boards are able to stay ahead.

A good governance practice is to ensure that shareholders know the board’s roles, responsibilities and accountability. This includes explaining how the board’s compensation is aligned with the goals of the company’s strategic plan and also defining what is effective oversight and an effective system of checks and balances.

A clear framework for managing the risks faced by the company is also essential. It is essential to comprehend the risk profile of the company both in the short- and long-term, and work together with the board to decide the way it will evaluate these risks. This also means ensuring that the management and board are equipped to recognize risks, including internal factors such as cultural norms and insufficient communication between directors.

It is also crucial that you listen to shareholder concerns and encourage participation. This is especially important in the current climate of increased shareholder activism. For instance, boards must collaborate with shareholders in order to find and address the issues of shareholder discontent prior to the time of proxy season.

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