The board of directors is responsible for the day-today operations and long-term plans of a company or non-profit institution. It is the board with a fiduciary duty to shareholders and other stakeholders.
The board chooses and supervises the chief executive officer, as well as other management personnel. It also decides on and approves major shifts in the direction of a business. Additionally the board generally advises the CEO and other executives on strategic goals and capital allocation. It also offers advice regarding legal issues and risk management, as it is legally responsible for the most important decisions of a company.
It is essential that board members adhere to the principles for collaboration and communication. These guidelines help create trust and ensure high-quality decision-making. Board members must have previous experience in governance and leadership. In addition, it is important for boards to include a mix of gender, race, age, and geographic diversity so that they represent the company’s customer base.
Board members should also be able to commit a substantial amount of time. In the past few years board directors have reported spending more time performing their duties. Therefore, it is critical that when selecting board members, companies take the time to assess candidates with care. This may include a formal orientation program that helps new directors get an understanding of the overall plan, goals, and history of the business they will be representing on the board.