A board of directors oversees and advises an organization. It is not a part of management and makes decisions to ensure that the business is successful. The board ensures that the organization operates lawfully and in the best interests of employees, investors, and other stakeholders. Board members must have broad expertise and experience, and are expected to foster an environment of trust and transparency.
The size, composition and structure of a board will differ according to the nature of the entity. This includes whether it is publicly traded (as a public company) or privately held (private or limited), or owned by family members or employees (family-owned). The governance of each board is governed by its own set of rules, which could be framed in its articles of incorporation or other bylaws.
The board’s primary responsibility is to fulfill three key obligations:
A well-rounded Board includes members with a variety of backgrounds and experiences. They are generalists, able to provide a helicopter’s perspective and yet experts in their areas of focus. They are not afraid to ask difficult questions or challenge management’s beliefs. The best boards also promote diversity, and promote collaboration, communication, and trust.