There is a need to distinguish the role of management from that of the board. This can be difficult in situations where the principal management comprises the owner/s of the business with perhaps some key staff who have certain operational responsibilities. There may be an insufficient number of directors to have an effective board carrying out the various commercial and legal responsibilities that are the preserve of the board.
Having one or more experienced non-executive directors is one way of beginning the process of bringing objectivity, accountability and governance to a company. There should be a separation of what goes on at management meetings and what goes on at board meetings. They are not the same. The drive for such change will often come from those who are not close to the company but who have been brought on to the board because of their experience of best practice in other companies and sectors.
All directors should bring their personal values to bear on setting the company’s vision and mission, policies, standards and ethics – they should help chart the company’s strategic direction, vision and mission. Non-executive directors must, however, refrain from interfering with management in implementing strategies to achieve these objectives. That said, they must hold management accountable for performance – not just financial performance but also for performance on achieving the strategic objectives.
The directors should ensure that management identifies and evaluates risk in all areas of the business and develops minimisation strategies appropriate to its business and the market in which it operates and that there is proper and timely management succession.
The ethics and standards for the business are set by the board and it is the board’s responsibility to ensure that the tone it sets at the top filters down to all levels within the company. Directors need to give this high importance and satisfy themselves that corporate policies, set at the top, are being followed.
