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The effectiveness of governance and leadership is not measured by activity but rather by planned outcomes.
Typical governance activity includes Annual General Meetings, Board meetings, committee meetings, approval of medical staff credentialing, and other routine activities.
But, the key purpose for the existence of the Board is to enhance executive decision-making. Therefore, how much of the busyness of the schedule is actually on target? Did the Board merely attempt to justify its existence or did it perform a valuable function for the organization?
There are four primary functions of the Board which should be the focus of all Board activity. Theses include:
- To recruit, retain, evaluate, and compensate the CEO.
- To approve strategic direction.
- To provide high level operational oversight.
- To perform the audit function.
The Chair of a Toronto hospital Board is currently seeking ways for the Board of Directors to add value to the organization. He asks, "beyond the significant costs of a Board and the routine maintenance of governance process, what incremental value is the Board bringing?"
- To recruit, retain, evaluate and compensate the CEO
The Board's primary functions each have the possibility of adding value. The selection of leadership and the approval of the strategic direction have the greatest potential for making a difference through value-added governance.
If the Board accomplishes nothing else, it must ensure that the organization has an effective CEO. It is very difficult for a CEO to be effective with an ineffective Board and, a Board cannot be effective if it permits inadequate executive leadership.
Supervision at low levels in the organization requires specific knowledge and skill related to the functional area. The CEO requires general knowledge and experience in leading complex organizations. CEO skills are leadership, governance, strategic thinking, performance improvement, human resource management, business development, and finance.
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