A board of directors is an elected group of individuals who represent the interests of a business. The board includes the chief executive officer (CEO) and senior managers and prominent individuals who are not involved in day-to-day operations. It sets high-level strategy and supervises management, and meets regularly to review performance and track progress. It also approves major corporate transactions like mergers, purchases stock splits, new products that are launched. The board also sets the compensation policies for the CEO, other executives and ensures that they are in line with the organization’s goals. It also manages risk and supervises financial and operational performance including the preparation of annual budgets and reports.
A great board requires a diverse range of perspectives and knowledge. The best boards are highly engaged and proactive, addressing issues that could affect their organizations, including strategic focus, culture, leadership succession as well as governance, talent management and resilience, risk, digital transformation, sustainability and possible mergers and acquisitions. They provide oversight and insight on these issues while preserving the essential distinction between their role and that of management.
To perform their roles and responsibilities, the most effective board members work more closely with the CEO in order to comprehend the company’s vision and strategy and the risks and challenges. They are ready to engage in meaningful discussions that focuses on strategic plan as well as oversight and accountability. They also make decisions according to the company’s best interests while ensuring autonomy and avoiding conflicts of interests.