A board of directors is legally accountable for high-level decisions, including hiring and firing the chief executive officer, overseeing the strategic direction of the business, and ensuring that the company is able to meet its objectives. The board of directors is comprised of experts, respected people and former executives selected from the community. They are responsible for establishing corporate governance.
A solid board is one that has a clear mission and operates with openness to communications and respects the diversity of opinions. It also holds itself accountable to shareholders and stakeholders. It also includes directors who are independent who are not entangled in conflicts of interest and who have an outlook for the long-term company’s success. Having a formal orientation process as well as establishing relationships with other members, and committing to meet on time are key.
In addition to business savvy, a good board member is also a person with an intellectual curiosity and is capable of asking the management and other members of the board constructive questions that challenge collective thinking and help make the most appropriate decision. A board member’s specific experience can be a great asset.
Boards are increasingly taking up more responsibilities like strategic planning and resilience and risk management. They also have to tackle issues related to diversity and inclusion and digitalization and technology. They must be more technologically knowledgeable, and play a greater role in the hiring process of CEOs and other senior leaders. The COVID-19 pandemic has taught boards to be more proactive in dealing with emergencies and preparing for the possibility of uncertainty, according to McKinsey.
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