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The principles of management for boards determine how a board manages its business. They govern the relations between a company and its Board of Directors, and how the Board supervises corporate issues that cannot be delegated to lower-ranking officials.

The board of directors is responsible for a myriad of issues that cannot be included in the annual report of a business. The board, for instance must recruit and hire a CEO, make sure that the company is acting in its best interest and also communicate any issues that are causing concern to shareholders. The board also has a role in assessing the potential of the company and its capacity.

A growing number of boards conduct annual assessments to evaluate and improve their methods of carrying out their responsibilities. These can be focused on the board or its committees, individual directors or the chair.

A common practice is keeping a written record for all meetings. This helps the board understand the implications of its decisions for other parties, including employees and investors. A well-written set or minutes can be a valuable source of evidence in legal proceeding.

The board should also be able to identify and evaluate risk. This includes identifying the company’s weaknesses and preparing plans to prevent or mitigate them. It also includes determining the impact of any changes on stakeholders, such as communities. Moreover, the board must ensure that it is informed about all major developments in a timely fashion. The board, for instance should be aware of instances when CEO compensation is higher than the company’s performance and average salary for employees.