A board of directors has legal responsibility for making high-level decisions. This includes the hiring and firing of the CEO, directing the strategic direction and ensuring that the company is meeting its objectives. This group is made up of respected experts and former executives who are chosen from the community. They are responsible for setting the corporate governance.
A well-functioning board has a clear mission and operates with open communication and respects diverse viewpoints. It also holds itself accountable to stakeholders and shareholders. It also has independent directors who are free of conflicts of interest and who have an eye on the long-term for the company’s success. The importance of a formal orientation, building relationships with members, and meeting at the right time is crucial.
A good board member is not just skilled in business, but also curious. They are able to ask thoughtful questions to the management and to other members that will challenge their thinking and help them make the best decisions. Being a specialist like capital-raising or sales experience is also an advantage.
Boards are increasingly assuming read additional duties, including strategic planning managing risk and resilience as well as diversity and inclusion as well as technology and digitization. In turn, they must be digitally literate and have an increased role in hiring and succession planning for the CEO and other leaders. The COVID-19 epidemic has taught boards to be more proactive in dealing with crisis and preparing for uncertainty, according to McKinsey.