A board of directors monitors and advises an organization, is not a part of management and makes the decisions that ensure that the business is successful. It ensures that the business is legally operating and in the best interests of investors, employees and other stakeholders. Board members should possess 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 according to the nature of the entity. This includes whether it is publicly traded (as an open company) or privately held (private or limited), or owned by employees or family members (family-owned). The rules that govern each board’s governance are set out in the articles of incorporation, or other bylaws.
The board’s primary responsibility is three main obligations.
A well-rounded Board includes members with a range of backgrounds and experiences. They are generalists who can keep a broader perspective, and yet are experts in their specific areas of expertise. They are prepared to tackle tough questions and challenge management’s beliefs. The best boards also encourage diversity, and promote collaboration as well as communication and trust.