What is the best Governance Framework – and why?

The manner in which a corporate board of directors is governed is directly connected with the industry in which the business operates. However, with that recognised, there are governance framework considerations that transcend both industries and individual corporations.

There is a board governance framework that is generally appropriate to virtually any type of corporate enterprise operating in the 21st century. This framework includes these three primary elements:

  • strong executive committee
  • meaningful platform for non-executive directors
  • reliable meeting structure

 

Strong, Proactive Executive Committee

A primary element of the best governance structure for a corporate board is a strong, proactive executive committee. Although this may seem like a commonsense notion, a striking number of corporate boards lack this vey element. The reality is that often people end up on corporate board executive committees believing that they have landed in their positions as a commendation for prior service. In fact, what a corporate board must have is an active – indeed, proactive – executive committee and not a clique swarmed in fluff.

The exact composition of an executive committee understandably does vary from one corporation to another. Typically, a properly functional, dynamic executive committee is comprised of board officers that include:

  • chair
  • vice-chair
  • secretary
  • treasurer

In addition, an executive committee tends to benefit from the presence of those board members who chair the key committees of the body. These might include the chairs of the strategic planning and finance committees.

 

Meaningful Platform for Non-Executive Directors (NEDs)

NEDs exist on a corporate board for crucial purposes. As they are non-executive directors and usually drawn from outside the ranks of the corporation itself, they bring to a board a fresh and independent approach to issues.

With these objectives duly noted, the need for a meaningful platform for NEDs is patently necessary. In short, they must have a reliable means of conveying their thoughts, positions and data to the board as a whole. With a reliable platform absent, NEDs simply never fulfil their potential and a corporation is deprived of an invaluable resource.

 

Reliable Meeting Structure

Finally, when it comes to the best governance for a corporate board, a reliable meeting structure is necessary. This requires reliable meeting times throughout the course of any given year. In addition, the manner in which specific board meetings (and committee meetings) are conducted must also be reliable.

A reliable meeting structure ensures optimal functioning of the board as a whole. Moreover, it works to ensure the optimal functionality of the component parts of that body, including officers and committees.

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