A board of directors has legal authority to make high-level decisions. This includes the hiring and firing of the CEO, directing the strategic direction of the company and ensuring that the business is meeting its objectives. This group is made up of experts, respected people and former executives who are chosen from the community. They are responsible for setting corporate governance.
A solid board has a clear purpose, operates with open communication, and is open to different opinions. It is also accountable to its shareholders and other stakeholders. It also has independent board members that are free from conflicts of interest and who have an optimistic view of the future of the company. The importance of formal orientation, building relationships with members, and arranging meetings on time is paramount.
A good board member is not only smart in business, but also curious. They are able to ask thoughtful questions to the management and to other board members that challenge their thinking and lead to the most effective decisions. A niche expertise, such as capital-raising or sales expertise can be a great asset.
Boards are increasingly taking on additional duties, including strategic planning managing risk and resilience as well as diversity and inclusion https://boardnearme.com/how-to-operate-with-data-room-due-diligence/ and technology and digitization. This means that they need to be more digitally knowledgeable and have an increased role in hiring and succession planning for the CEO and other leaders. The COVID-19 pandemic has taught boards that they need to be more proactive in addressing crisis and preparing for uncertainty, according to McKinsey.