It’s no secret that I believe having a board (of directors / advisers), formal or not, is critical to a company’s success. As in life and in business, perspective is key when making important decisions and having someone who has your (or your company’s) best interest in mind, is a valuable resource.
As I was reading yesterday, I came across some great information about questions that a board must ask to really gauge the state of a company. If you are a CEO who has a board and they are not asking these questions, maybe you need to augment your board (or, find new members all together). If you are currently a board member and not asking these questions, you need to start.
Regardless on which side of the table you sit, these are critical questions that require considerable thought. Granted – some questions may not apply to all businesses but, if nothing else, maybe asking some of these questions today will position the company on a successful track thereby allowing you to ask the remaining question later?
1) Does management have a comprehensive strategy and operating plan for the company to realize its performance potential?
2) Are the necessary human, financial, physical, and other supporting resources provided and properly allocated to achieve success?
3) Does the CEO provide the leadership required by the company, and does the organization have a succession plan for this position?
4) Are financial information systems, control processes, decision delegations, and reporting responsibilities established and audited?
5) Does management utilize an effective system of key performance indicators (KPI) to monitor and control operating performance?
6) Are mechanisms in place to ensure conformance with legislation and regulations protecting customers, employees, and the community?
7) Does management adequately report, control, and provide for all material disputes of a legal, financial, or regulatory nature?
8) Are effective risk management processes in place to prevent or correct physical or financial crises?
9) Does the board adequately understand and support the resolution of near-term, intermediate, and long-term priorities of management?
10) How does the company’s financial and market performance compare with its historical, projected, and competitor’s performance?
11) What specific competitive strengths and weaknesses, market forces, or drivers of profit dynamics determined performance results?
12) What are the reasonable objectives for, and limits to, the company’s growth, profitability, and appreciation of shareholder’s value?
Source: Strategy: A View from the Top