Legally, boards are required to ensure that a company achieves their mission and has a well-thought-out strategic plan and doesn’t get into legal or financial issues. The way in which boards are required to fulfill these obligations differs greatly and is dependent on the particular circumstances.
Boards often commit the blunders of becoming too involved in operational issues that data management: key to M&A success should be left to management or are unclear regarding their legal responsibility for the decisions and actions taken on behalf of a company. This confusion often results from not keeping up with constantly changing requirements for boards, or from unanticipated challenges like unexpected staff resignations or financial crises. Typically, this is prevented by scheduling discussions about the challenges faced by directors and by providing them with guidelines and basic written materials.
Another common error occurs when the board decides to delegate too much power and not review the matters it has given to others. (Except in the smallest NPOs). In this scenario the board loses its ability to evaluate and not determine if these operations contribute to a satisfactory performance for the entire organization.
The board should also develop a system of governance that outlines how it will communicate with the general manager or chief executive officer. This includes the decision-making process for the frequency of meetings and how members will be selected and removed, and how decisions will take place. The board must also establish information systems that are able to provide accurate information about its past and future performance to support its decision-making.
