The board of directors supervises and advises an organization. It is independent of the management of the company, and makes decisions to aid the company’s growth. It ensures that the business is operating legally and in the interest of employees, investors, and other stakeholders. Board members should possess a broad range of skills and experience, and strive to establish an environment of trust and transparency.
The composition, size and members are contingent upon the type of business entity it is, whether it is publicly traded (a public company) or not publicly traded (private or limited), owned by family members or employees (family or employee-owned), or tax-exempt (a charity or a nonprofit). The rules that govern a board’s governance are outlined in the articles of incorporation, or other bylaws.
The board’s primary responsibility is to fulfill three key obligations:
A well-rounded Board includes members with a range of backgrounds and experiences. They are generalists, able to keep a broader perspective, and yet are experts in their particular areas of expertise. They are not afraid to ask challenging questions and challenge the assumptions of management. The best boards encourage diversity and encourage communication, collaboration, and trust.