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A board of directors supervises and advises an organization. It is independent of the management of the company, and makes decisions to ensure that the business is successful. It ensures that the entity is operating in compliance with the law and is in the best interests of investors, employees and other stakeholders. The Board members must have many different expertise and skills and should strive to create a culture that is open and trusting.
The size, composition, and structure of a board will differ depending on the type of entity. This includes whether it is publicly traded (as a public company), privately held (private or limited), or owned by family members or employees (family-owned). The governance of every board is determined by its own set of rules, which can be defined in the constitution or other bylaws.
The primary responsibility of the board is three main obligations.
A well-rounded board is made up of people with a wide range of backgrounds and experiences. They are generalists that can provide a helicopter’s perspective and yet are experts in their areas of focus. They are not afraid to ask challenging questions and challenge management’s assumptions. The best boards encourage diversity and encourage collaboration, communication, and trust.
