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Effective Board Management Requires the Right Mix of People and Structures

Effective board management requires many things, including the right combination of people and structures. It also requires a thriving culture that encourages open debate and discussion, as well as the ability to communicate effectively with the CEO and other board members. These abilities and behaviors can make a huge difference.

The ideal combination of people, however, will differ for each company. The most effective boards will blend industry experience and personality types. They should have the courage and conviction to raise red flags even in tough situations. They will have a high level of trust in each other and the CEO. They will be able to quickly and effectively grasp the complexities of important company issues, including operational, financial and strategic opportunities and challenges.

Boards should also ensure that they know their responsibilities within the company. This is especially important for boards of not-for profit organizations, who face significant legal liability if they fail to fulfill their governance duties.

Boards must be able to identify and evaluate the effectiveness of their own boards. A thorough assessment process will enable them to address the issues of talent, develop a more open and transparent board culture, clarify their strategic goals and make sure that the board is aligned as whole with the CEO.

It is also important to examine the structure of the committees and ensure that they are designed to help the board achieve its objectives. It might be time to consider eliminating committees that are no longer required or modifying the composition of existing committees. A committee focusing on the risks of climate change may not be needed for a bank with no physical assets in the area.