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The principles of board management are a collection of best practices that can help the board to fulfill its mission. They include the use of annual evaluations to assess a board’s performance, the appointment of an independent chair and the inclusion of non-management directors in CEO evaluations as well as the use of executive sessions for discussions of sensitive issues, such as conflicts of interest.

A board’s responsibility is to take actions that is the long-term best interests of the business and its shareholders. While a board must consider the opinions of shareholders, it is also accountable to exercise its own independent judgment. A board should also carefully look at the possibility of short- and long-term threats to the company’s ability to create value and consider them when evaluating corporate decisionmaking and strategies.

As a result, there’s no universal model for a board’s design and composition. Boards must be prepared to play around with different models, and think about the ways they can impact their overall effectiveness.

Some boards are prone to adopting a geographic or special-interest-group representation model in which each director is perceived to represent the views of individuals located in a particular geographical area. This can lead to boards that are too insular and unable to tackle the challenges and risks that a company faces. Boards should be aware of the growing focus on environmental, social and governance (ESG) concerns by investors requires them to be more flexible than they were in the past.