Legally boards are required to ensure that an organization achieves their mission and has a sound plan of action and doesn’t fall into financial or legal problems. However, the way boards take on the responsibilities of these boards can be very different and is very dependent on the particular circumstances of the company.
A common mistake is that boards are too involved in operational matters that should be left to management, or that they are not aware of their own legal responsibilities for the decisions they make and the actions they take on behalf of the organization. This confusion is usually caused by not being able to keep up with the ever-changing demands placed on boards, or from unanticipated issues such as sudden staff resignations and financial crises. This is usually resolved by taking time to discuss the problems facing directors and providing them with simple, written materials and a briefing.
A second common mistake is when the board chooses to delegate too much power and not examine the matters it has given to others. (Except in the smallest NPOs). In this situation, the board loses its evaluation function and no longer assess whether these operations contribute to satisfactory performance for the entire organization.
The board should also create an effective governance system, including how it interacts with the general manager or CEO. This includes determining how the board will meet regularly, how its members will be chosen and removed, and the manner in which the decisions will be made. The board must also create information systems that are able to provide accurate information about its past and future performance to aid in making decisions.
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