A board of directors is the set of directors chosen to represent shareholders, acting as fiduciaries, in making decisions and directing a company. They make policy and operate in a manner that is independent of day-today management. They create high-level plans, and support high-level managers by educating them and helping them with their work. They also play a crucial role in the management of crises.
The role of the board is different by organization, but in general it includes safeguarding shareholder interests and making efforts to maximize value. It ensures that shareholders get timely and accurate information and ensures transparency in financial disclosure and reporting. It manages risks, and collaborates actively with stakeholders to create positive relationships and ensure corporate behavior aligns itself with societal expectations.
Choosing the right members to be on your board is vital to the overall success of your organisation. It is essential to select individuals who possess the right mix of governance, leadership, and business expertise to provide strategic guidance and oversight. They must be able to listen to a variety of perspectives, engage in constructive dialogue and embody your company’s fundamental values.
It’s also recommended to ensure that your board is as diverse as you can, and to have an uneven number of members to ensure that ties when voting on important issues can be broken. Smaller companies typically choose between five and seven board members. Larger organizations should aim to have nine to eleven directors on their boards.