A board of directors is comprised of individuals who provide effective governance to an organisation. This includes non-profits. They provide high-level direction and strategy and protect the financial interests of the company and ensure that the organization has the resources required to fulfill its mission. They make sure that the organization is in compliance with laws and ethical standards. Boards are also responsible for selecting corporate officers, approving dividends and stock options, as well as responding to requests for mergers and acquisitions. In a public company, the board has a legal obligation to represent the interests of shareholders and is the main source of governance.
In general, boards are more effective when they embody four key qualities: Collaboration and communication The board should actively engage in discussions and consider different perspectives to make well-informed decisions. They should also effectively communicate with stakeholders in order to foster positive relationships while ensuring that the company’s actions are aligned with societal expectations.
Strategic vision The board should be able to provide an outlook on the future, assisting the CEO and other senior leaders establish their strategic priorities. It should be able to recognize and evaluate the effectiveness and efficiency of the organization’s strategies, and provide a working environment that is constructive and supportive and encourages creativity.
A good board will include members with expertise in governance, financial oversight, and legal issues as along with a variety of other areas like risk management, talent management sustainability, digital transformation, and branding management. Based on the company, the board could consist of employees, volunteers or members chosen by shareholders who are not shareholders.