A board of directors is the legal authority to make high-level decisions. This includes appointing and firing the CEO, overseeing the strategic direction of the company and ensuring that the company achieves its goals. The board is typically comprised of former and sitting executives as well as experts and respected individuals who are selected from the larger community (called outside directors) and is the one who sets corporate governance standards.
A well-functioning board has a clearly defined mission and operates with open communications with respect for differing views, and accountability to shareholders and other stakeholders. It also includes independent directors who are free of conflicts of interest and have a long-term vision for the business’s success. The importance of a formal orientation, developing relationships with members, and having meetings on time is crucial.
In addition to business acumen, a good board member is also an intellectual and is able to ask the management and other members of the board constructive questions that challenge group thinking and help make the best decisions. A board member’s expertise is a significant asset.
Boards are increasingly assuming additional tasks, such as strategic planning, risk and resilience management, diversity and inclusion, as well as technology and digitization. They should be more technologically knowledgeable, and have a greater part to play in the selection of CEOs and other senior leaders. According to McKinsey COVID-19’s pandemic corporate board directors salary made boards more proactive when addressing crisis and preparing for uncertainty.
