A board of directors oversees and advises an organization, operates independent from company management and makes decisions to assist the company to grow. It ensures the entity is operating legally and in the interest of investors, employees and other stakeholders. Board members should have an array of expertise and skills and should strive to create a work environment that is transparent and trustworthy.
The structure, size and members differ based on the nature of the business entity, whether it is publicly traded (a public company) or not publicly traded (private or limited) or owned by employees or family members (family or employee-owned), or tax-exempt (a non-profit or charity). The governance of each board is governed by its own set of rules that can be laid out in its articles of incorporation or in other bylaws.
The board’s primary obligation is to fulfill three fundamental obligations:
A well-rounded board comprises of people with a wide range of backgrounds and experiences. They are generalists that can provide a helicopter’s perspective and yet experts in their areas of focus. They are not afraid to ask challenging questions and challenge management’s assumptions. The best boards encourage diversity and encourage collaboration, communication, and trust.