The Roles and Responsibilities of a Board of Directors
A board of directors is a set comprised of shareholders who are elected to represent the interests of the business. The board is comprised of the CEO, senior managers, and other eminent people who are not directly involved in the day-to-day business activities. It sets high-level strategy and supervises management, and meets regularly to review performance and monitor progress. It also approves major corporate transactions, including mergers, purchases as well as stock splits and new product launches. The board also establishes the compensation policies for CEOs and other executives, assuring they are in line with organizational goals. It also manages risks, and oversees financial performance and operations which includes the preparation of annual budgets as well as reports.
A successful board requires a diverse range of perspectives and expertise. The best boards are highly active and involved, addressing issues that could affect their company, like strategic focus and culture as well as succession of leadership and talent management Governance and risk, sustainability and digital transformation, and possible mergers and acquisitions. They provide advice and oversight on these issues, while maintaining the critical distinction between their duties as a board and that of management.
To fulfill their roles and responsibilities the most efficient members of the board collaborate more closely with CEOs in order to understand the company’s strategy, vision, and difficulties, as well challenges and risks. They are able to engage in a debate which focuses on strategic planning, oversight and accountability. They make decisions that are in the best interest of the company, while preserving their independence and avoiding conflicts of interest.