A board of directors is responsible for the activities of a business entity (private or public company, non-profit corporation co-operative, business trust, or family-owned entity) and decides how the entity will be run. The members are elected (bylaws or articles of incorporation) or appointed by shareholders. They usually receive compensation for their service, either through a salary or as part of an option plan to purchase stock. They are able to be removed from their posts by shareholders, or in the event of breaching fiduciary duties, for example, selling board seats to outside interests and attempting to rig votes to benefit their own businesses.
Effective boards take into account the concerns of stakeholders and the management’s vision. They have members from inside and outside an organization. They are typically selected for their expertise and experience in the industry, ensuring they have the necessary skill sets to effectively guide the business. They should be able to identify and assessing risk, developing strategies to mitigate them and evaluating the performance of management.
When selecting new members for your board, make sure you take into consideration the time commitment they’re entrusted with beyond their duties. It is also important to know their availability and if they have any conflicts of interests. Meeting minutes that are well-documented will ensure that board members are aware of why not try board of directors their roles and responsibilities. This will also ensure accountability for any decision made. Additionally, it is important to build a list of potential candidates early in the process and make sure to inform people about board opportunities. This will enable you to find candidates who are qualified before the term is finished, avoiding any delay in strategy.