The 6 most frequent corporate governance mistakes

Handling the complexities of corporate governance can be daunting, which causes some mistakes that are not large structural flaws but that can, nonetheless, become big problems over time. 

The good news? With a little knowledge and a little care, your boards and committees can stop being plagued by these small but powerful enemies. 

1. Irregular meeting frequency

Ordinary meetings are not conducted on a regular enough basis to comply with the rules that have been laid out within the operating procedures of that board. 

2. Quorum breaches

There are meetings that are being carried out without having satisfied the quorum requirement and therefore the decisions reached during those sessions should carry no weight and be disregarded. 

3. Skipping extraordinary meetings

Each board and committee operating procedures should establish the situations in which extraordinary meetings are supposed to be called, to deal with pressing matters or when a crisis arises. Not doing so is a breach of such rules and therefore puts the wellbeing of the company and its employees at risk. 

4. Incomplete meeting minutes

The specific details of the structure of meetings, where important decisions have been taken, are missing. These may include basic aspects such as the time and location of the meeting, or it could lack crucial information such as voting breakdown, all agenda items or even attendance information. Successfully maintaining a clear record of all meeting activity is essential in protecting the legitimacy of decisions taken by a board or committee.

5. Not following up on the absence policy

Not enforcing the board’s absence policy means that members are allowed to remain on the board despite failing to attend the required meetings. Attendance is a crucial gauge in maintaining the quality of the board and guaranteeing that the decisions that have been taken come from individuals that are informed and up to date with the current situation of the organization. 

Boards made up of disengaged members who flout the rules surrounding attendance are all too common. Removing these members can be an excellent way to produce higher-quality debate in meetings and therefore more considered decisions. 

6. No Annual Reports

Many boards fail to produce an annual report that documents the decisions and advances that have been taken during that year.  

And even when they do exist, they often don’t follow a standardized model, which makes it difficult to compare and contrast reports produced by different boards and committees within the same organization.