A board of directors is a set of elected members who provide professional guidance and oversight to the business. This group is independent of management and is focused on the company’s major issues rather than day-to-day operations. The board of directors is responsible to ensure that the company is operating in compliance with the law and in the best interest of its shareholders and other stakeholders.
A well-run board of directors must possess the right mix of leadership skills along with governance expertise and experience to serve as an important resource for the business. Board members should be more than “yes people,” they must have the confidence to challenge management when needed and offer an alternative point of view. A board should not only be focused on its governance, but also interact with all stakeholders, including employees as well as suppliers and customers and communities, who are affected by the company’s business operations and its strategy.
A board also sets corporate policies, supervise the implementation of strategic plans and monitor their effectiveness. It will also evaluate the CEO’s performance and assist the CEO in senior management evaluations if appropriate. A board may also help the company establish relationships with external stakeholders who are beneficial to the business. It will also communicate with shareholders and other investors on matters that impact the business mission and the financial performance of the business. This includes assessing a company’s financial risks and monitoring global developments like the trade policy and geopolitical conflicts.
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