Boards have a legal requirement to exercise their due diligence to ensure that the company is able to achieve its objectives, has a sound strategy and doesn't fall into legal or financial difficulties. The way in which boards fulfill their responsibilities differs greatly and is dependent on the particular circumstances.
A common error is that boards get too involved in operational issues that should be left to management, or that they are not aware of their own legal responsibilities for the decisions they take and actions they take on behalf of the company. This confusion is usually caused by not keeping up with the evolving demands on boards, or from unanticipated problems like sudden financial crises and staff resignations. Typically, this can be solved by having a discussion on the challenges faced by directors, and by providing them with orientation and simple written materials.
Another common blunder is when the board chooses to delegate too much power and does not scrutinize the tasks it has given to others. (Except for the tiniest NPOs). In this case the board loses its evaluation function and can not be able to determine whether these operating activities add up to a satisfactory performance for the entire organization.
The board should also create a governance system including how it will interact with the general manager or CEO. This includes setting the frequency of board meetings and how members will be selected and removed, as well as how decisions will take place. The board should also develop information systems that offer valid data on its past and projected performance to support its decision-making.