The board of directors is accountable for the day-today activities and long-term plans of an company, whether it’s a nonprofit or a business. The board of directors is the organization with a fiduciary obligation to shareholders and other stakeholders.
The board oversees and selects the chief executive, along with all other management personnel. The board also makes decisions and approves major changes in the direction of a business. Additionally the board generally advises the CEO and other executives on strategic goals and capital allocation. It also offers advice on risks and legal issues since it is legally accountable for the top-level decisions made by a company.
It is vital that board members embody the principles of collaboration and communication, that help build trust and assure high-quality decision making. Board members must have experience in governance as well as leadership. Additionally, it’s important for boards to include the diversity of gender, race, age, and geographical diversity so they reflect the company’s customers.
Additionally, board members must be able to commit to a significant amount of their time. In the past few years board directors have been reported to spend more time on their roles. It is vital that when deciding on board members, organizations take the time to evaluate candidates with care. This can include an official orientation session to ensure that new directors have a an understanding of the organization’s mission as well as its goals and its past.
