A board of directors is an elected group of members that gives expert advice and oversight to a company. This group is independent of management and focuses on the main issues of the company rather than day-to-day operations. The company’s board is accountable for ensuring that the company is operating in accordance with law and in the best interests of its shareholders and other stakeholders.
A well-run board of directors will possess the appropriate mix of leadership skills, governance expertise, and the experience to be a valuable resource to the business. The board members must be more than “yes people” and should have the courage to challenge managers when needed and provide an alternative viewpoint. In addition to the governance elements of a board, it is important for a board to actively engage with its stakeholders including employees, customers, suppliers and communities impacted by the business’s operations and strategy.
A board can also establish policies for the company, oversee the implementation of strategic plans, and evaluate their effectiveness. The board will also be able to evaluate the CEO and, if necessary, participate in senior management reviews with the CEO. A board can also assist the company establish relationships with stakeholders outside the company who are beneficial to the company. It will also communicate with shareholders and other investors on matters affecting the company’s business objectives and financial performance. This will include analyzing the risk profile of the financials of the company and monitoring the impacts of global developments such as trade policy and geopolitical tensions.
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