Corporate boards face several pressing challenges including economic uncertainty, ever-evolving compliance requirements, risk management, and developing ESG strategies – all to stay competitive.
Take cybersecurity, for example. According to the April 2024 Global Financial Stability Report, cyber threats are hitting companies harder than ever, causing unprecedented financial losses. Since 2017, these losses have skyrocketed to $2.5 billion.
But the direct financial damage is only part of the problem — indirect costs, like reputational harm and the need for enhanced security measures, make the overall impact even more severe.
And with good reason — KMPG found that 59% of companies are uncertain as to whether they are well protected against cyber threats.
Effective governance is at the heart of meeting these challenges head-on. To achieve that, companies should review how their board operates, ideally implementing some board management best practices. In this article, we’ll explore the importance of corporate governance and how to apply best practice insights for making major decisions.
What is board management?
Board management is the process of governing and coordinating boards and committees in different fields to guarantee their proper functioning. This practice is essential for organizations of all types, including governments, businesses, nonprofits, and educational institutions.
How does board management for the government differ?
While the core principles of board management apply universally, government boards face distinct challenges and responsibilities due to their public service role.
In the public sector, board management involves the monitoring of public agencies and ensuring effective governance at national, regional, and local levels. Unlike in the businesses or education sectors which have formal boards, governments rely on councils, commissions, and other, similar groups to handle these responsibilities.
Each of these entities is responsible for both policy development and implementation. In particular, they manage budgets, navigate the legislative process, and hold the government accountable to the public.
At the local level, the city council and mayor are the key players in dealing with communities’ concerns. With good cooperation and coordination, local governments can address issues such as providing adequate infrastructure, promoting economic development, and ensuring public safety.
What is board management for corporations?
Management board activities in the private sector fall under the corporate governance system. Here, the board of directors vs. management have distinct but complementary responsibilities.
It’s important to note that corporate board management is not just limited to supervising meetings. It also involves all aspects of recruiting and coordinating new members and ensuring that the board chair is committed to the strategic plan of the company. Additionally, it projects a high level of executive communications within the organization.
Good corporate governance is essential for sustainable business success, investor satisfaction, and securing strong market positions.
- Useful reading: roles and responsibilities of the executive board.
What is board management in education?
The educational managing board is an environment where organizations can cultivate the best practices for student success.
As much as the educational board structure reflects that of corporate boards, its objectives are different. In this regard, good board governance is critical for the sustainability of a school or a university and its reputation.
In organizations at a post-secondary level, there is a board of trustees instead of a board of directors. They are supposed to manage the institutions’ welfare and educational responsibilities.
The dynamics for school boards are somewhat different to post-secondary institutions. Specifically, the school board is elected by community members, and so held responsible by the people they represent. The board’s role in educational board management involves policy drafting, and administrator staffing.
Best practices for board management
Good board management involves the creativity and flexibility of the board. Best practices, such as communication and transparency, are fundamental. However, let’s look at some less obvious measures that can greatly improve the boards’ performance.
- Diversity of opinions. While boards pay a lot of attention to diversity in aspects such as gender, race, or even experience, how about cognitive diversity? Board members need to be comfortable with voicing disagreement, which would result in more effective discussions and, subsequently, effective decisions. For example, invite advisors or rotate members with fresh perspectives to prevent groupthink.
- Adaptive agendas. Replace more rigid scheduling with adaptive ones. Be open to switching topics when there is an emergent matter at hand. This approach can help to maintain the flow of boardroom meetings and ensure that pressing issues get the attention they require.
- Board member sabbaticals. Offering the board members a chance to step down temporarily may be beneficial as they take up other professional development activities or even branch out into other fields This break can help them re-focus and also bring new perspectives to the boardroom.
- Reverse mentorship. Traditionally, mentorship flows from senior to junior, but reverse mentorship can provide invaluable benefits in the boardroom. For example, pair seasoned board members with younger executives or even tech-savvy junior employees to exchange insights.
- Continuous board education. Regardless of board members’ experience, the environment in which they operate is constantly changing, as are the various aspects of governance, special technologies, and industries in general. A learning program may include routine workshops, webinars, and even industry conferences focused specifically on the unique needs of board members.
- Useful reading: how to run a board meeting?
Board management tools
Choosing the correct board management tools is important since they impact how the board operates, communicates, and manages its compliance with the existing legal frameworks.
Board management software such as iDeals Board offers a secure environment where board members can create, share, and sign documents as well as communicate via secure channels. Let’s delve into the key advantages of this board portal solution.
- Cost-effectiveness
The first undeniable benefit of a portal is a decrease in costs associated with board meetings. Typical board meetings can involve expenses such as transport, accommodation, meals, and entertainment, amounting to as much as $250,000 annually.
Companies can limit additional expenses when meetings are carried out virtually. - Fresh and up-to-date information
iDeals Board solves the problem of outdated documents with the help of updates and version control. As a result, all board members can easily access necessary information. Additionally, its annotation capabilities and electronic voting enable real-time communication from anywhere in the world. - Compliance and security
The platform incorporates multi-factor authentication, granular access control, and single sign-on to secure user access and prevent unauthorized entry. Data encryption safeguards all documents and communications, ensuring that information remains confidential and tamper-proof. - Agenda builder
The agenda and board book builder lets users set agenda items, attach relevant documents, and manage voting sessions. The board book viewer allows for detailed document interaction, including private and public comments, annotations, and electronic signing. - Document repository
The documents repository offers a bulk upload with various file types and options for access control and commenting. Tools for user and group management make the onboarding process and role assignment more functional. Plus, the board can work with multiple workspaces and access a help center when needed.
- Useful reading: what is a board portal?
Key takeaways
- Board management is the structure put in place to ensure the effective governance, coordination, and accountability of the board in any sector, including government, corporations, and education.
- Board management in government involves overseeing public agencies, managing budgets, and ensuring accountability at all levels.
- Corporate board management focuses on collaboration between the board and management, including recruitment, strategic alignment, and communication.
- Educational board management oversees institutions, ensures organizational stability, and sets policies.
- Effective board management includes fostering cognitive diversity, adopting adaptive agendas, allowing sabbaticals for members, using reverse mentorship, and engaging in continuous education to adapt to changing environments.
- Board portal software enhances board efficiency by reducing costs, ensuring real-time updates, and maintaining compliance and security through features like multi-factor authentication and data encryption.