A board of directors is a group comprised of shareholders who are elected to represent the interests of the business. The board comprises the CEO, senior managers, and other highly regarded individuals who are not directly involved in day-to-day business operations. It oversees management and sets high-level strategies. It meets regularly to evaluate and monitor performance. It also approves major corporate transactions like mergers, acquisitions, stock splits and new products that are launched. The board also decides on guidelines for the CEO’s compensation and other executives and makes sure they are in line with organizational goals. It also manages risks and oversees the financial performance and operations and the preparation of annual budgets and reports.
A great board requires a variety of perspectives and a variety of knowledge. The best boards are engaged and proactive, addressing issues that could impact their businesses, such as strategic focus on culture, leadership succession, talent management, governance, risk and resilience, sustainability, digital transformation and the possibility of mergers and acquisitions. They provide guidance and oversight on these issues, while also ensuring the vital distinction between their responsibility as a board and that of management.
In order to perform their duties and responsibilities, the most efficient board members work more closely with CEOs in order to understand the company’s strategy goals, vision, and issues, as well as risks and challenges. They are ready to engage in meaningful discussions which focuses on strategic planning as well as oversight and accountability. They make decisions that are in the best interest of the company, while preserving their independence and avoiding conflict of interest.
