The Importance of a Well-Designed Board of Directors

A board of directors is a governing body composed of members who serve as custodians of shareholders’ interests and ensure the long-term stability of an organization. A strong board, comprised of individuals with a variety of skills and experiences is vital for any business.

Traditionally, boards have supervised management teams, while also the approval of strategies proposed by the company’s executives. A well-designed board is now able to offer proactive leadership in crucial areas like corporate vision and strategy including risk and opportunity development, talent, sustainability and succession of leadership.

A company’s board typically consists of both inside and outside members. An inside director is a executive of the company, whereas an outside director is not employed by the company. To be considered an independent director one should not have connections to the business in any way.

When you’re assembling your board, look for those who are passionate and experienced in your industry. It is also essential to have individuals with a range of skills and who are able to bring creative problem-solving and innovative thinking along with strategic thinking. You should also search for people who have specialized boardable features and comparison expertise like finance, marketing, or capital raising.

It is crucial to understand that you’re legally accountable and have fiduciary responsibilities as an officer. In addition, if you’re shareholder, you have the right to vote on board members during the proxy season. If you’re considering voting for an unpopular board member, take your time reading the proxy papers and make sure they’re truly independent.