A board of directors is a set of individuals who are elected to represent shareholders and serve as fiduciaries while making decisions and directing an organization. They set policy and are separate from the day-to-day operations. They develop high-level strategies and mentor and guide high-level managers in their work. They also play a vital role in crisis management.
The function of the board varies according to the company but generally includes protecting shareholder interests as well as in promoting efforts to maximize value. It makes sure that shareholders get timely and accurate information and ensures transparency in financial disclosure and reporting. It manages risk, and actively engages stakeholders to establish good relationships and ensure corporate behavior is in line with social expectations.
It is important to choose the right people to serve on the board of your organization. It is crucial to select those who possess the right combination of governance, leadership and business expertise to provide strategic oversight and guidance. They should be able to pay attention to different viewpoints and engage in constructive discussions and embody your company’s fundamental values.
It’s important to have a board that is as diverse as is possible. Also, having an uneven number of directors can help break ties in voting on important issues. Smaller businesses typically choose five to seven members while larger organizations should try to have a minimum of 9 to 11 board directors.