Legally boards are required by law to ensure that a company is able to fulfill its mission and has a sound strategic plan and doesn’t get into legal or financial issues. The way boards fulfill their responsibilities is different and highly dependent on the situation.
A common mistake is that boards are too involved in operational aspects which should be left to management, or they are unclear about their legal obligations for the decisions they make and the actions they make for the benefit of the organization. This confusion is usually caused by not being able to keep up with the evolving demands on boards, or from unanticipated challenges such as sudden staff resignations or financial crises. This is usually resolved by taking the time to discuss the challenges facing directors and supplying them with a simple set of documents and a briefing.
Another mistake that is common is that the board over-delegates its power and decides not to examine those matters that it has delegated (except for the tiniest of NPOs). In this situation the board loses the evaluation function and cannot decide whether the operating activities contribute to a satisfactory performance of the company.
The board also needs to develop a governance system including how it interacts with the general manager or CEO. This includes setting the frequency of meetings and the manner in which members are selected and removed, as well as the manner in which decisions are made. The board should also create information systems that offer information on the past and future performance to aid in their decision-making.