Legally, boards are required to ensure that an organization achieves their mission and has a well-thought-out strategy and doesn’t get into legal or financial issues. The manner in which boards are required to fulfill these obligations is different and highly dependent on the circumstances.
Boards often make the mistake of becoming too involved in operational issues which should be left to management or are unclear about their legal obligations for decisions and actions made on behalf of an organisation. This confusion is usually caused by not keeping up with the evolving demands on boards or unanticipated issues such as financial crises and resignations of staff. It is often resolved by taking time to discuss the issues facing directors and providing them with a simple set of documents and an orientation.
Another common blunder is when the board chooses to delegate too much authority and does not scrutinize the tasks it has given to others. (Except for the tiniest NPOs). In this situation the board is unable to perform its assessment function and cannot determine whether the activities of the organization are contributing to a satisfactory performance of the company.
The board should also create a governance system including how it will interact with the general manager or CEO. This includes determining the frequency of board meetings and how board members will be elected and removed, and how decisions will take place. The board must also design information systems that collect information on the past and future performance to help them make decisions.