A Chairman’s checklist

Courtesy Hugh Parker, from Letters to a new Chairman, (Director Publications, 1979)

  1. Has the board recently (or indeed ever) devoted significant time and serious thought to the company’s longer-term objectives, and to the strategic options open to it for achieving them? If so, have these deliberations resulted in a board consensus or decision on its future objectives and strategies, and have these been put in writing?
  2. Has the board consciously thought about and reached formal conclusions on what is sometimes referred to as its basic ‘corporate philosophy’ – i.e. its value system, its ethical and social responsibilities, its desired ‘image’ and so forth? If so have these conclusions been codified or embodied in explicit statements of policy – e.g. in respect of terms of employment, etc.? Does the company have formal procedures for recording and promulgating major board decisions as policy guidelines for down-the-line managers?
  3. Does the board periodically review the organisational structure of the company, and consider how this may have to change in the future?  Does it review and approve all senior appointments as a matter of course?
  4. Does the board routinely receive all the information it needs to ensure that it is in effective control of the company and its management?  Have there been any ‘unpleasant surprises’ – e.g. unfavourable results or unforeseen crises – that could be attributed to lack of timely or accurate information?
  5. Does the board routinely require the managing director to present his annual plans and budgets for their review and approval?  Does the board regularly monitor the performance of the managing director and his immediate subordinate managers in terms of actual results achieved against agreed plans and budgets?
  6. When the board is required to take major decisions on questions of future objectives, strategies, policies, major investments, senior appointments, etc., does it have adequate time and knowledge to make these decisions soundly – rather than finding itself overtaken by events and, in effect, obliged to rubber-stamp decisions already taken or commitments already made?

If the answers to all these questions are affirmative, it is safe to say you have an effective board. If the answers are negative – or perhaps not clear – then you already have some indication of what needs to be done to strengthen your board.

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