A board of directors is a group of individuals elected to represent shareholders, acting as fiduciaries, in making decisions and overseeing a business. They make policy and are independent of day-to-day management. They devise high-level strategies, and mentor and supervise high-level managers in their work. They are also vital in crisis management.
The function of a board is different depending on the organization however, it’s generally about safeguarding the interests of shareholders and encouraging efforts to maximize the value of. It makes sure that shareholders receive accurate and timely information, and ensures transparency in financial reporting and disclosure. It manages risk, and proactively engages with stakeholders to establish positive relationships and ensure that the corporate behaviour is consistent with social expectations.
Choosing the right members to serve on your board is essential to the overall success of an organisation. It is crucial to select those who have the right mix of governance, leadership and business experience to provide strategic direction and oversight. They must be able effectively listen to diverse perspectives and engage in constructive debate and be a reflection of the fundamental values of your company.
It’s also recommended to create a board that is as diverse as you can, and also to have a varied amount of members so that the ties during voting on critical issues can be broken. Smaller companies usually select between five and seven directors. Larger organizations should aim to have at least nine to eleven directors on their boards.
