A board of directors is a set of individuals who are elected to represent shareholders. They act as fiduciaries in making decisions and supervising an organization. They establish policy and are not a part of the day-to-day operations. They set high-level strategies, and assist the senior managers by guiding them and providing guidance to them in their work. They also play a key role in the management of crises.
The role of the board is different by organization, but in general it is responsible for protecting shareholder interests and making efforts to maximize value. It makes sure that shareholders receive timely and accurate information, and ensures transparency in financial disclosure and reporting. It manages risks and engages proactively with stakeholders to foster positive relationships and ensure corporate behaviour is in line with social expectations.
It is important to choose the right people to sit on the board of your business. It is important to choose those who have the right mix of leadership, governance, and business experience to provide strategic guidance and oversight. They should be able effectively hear different viewpoints and engage in constructive dialogue and embody the core values of your organization.
In addition, it’s a good idea to create a board that is as diverse as you can, and to have a diverse amount of members so that ties in the voting process on crucial issues can be broken. Smaller companies usually choose five to seven directors while larger companies should be looking for 9 to 11 directors on the board.