Choosing a Board of Directors
The board of directors oversees the activities of a business entity (private or public company, non-profit organisation co-operative business trust, family-held entity) and decides how the entity will be governed. Its members can be elected (bylaws or articles of incorporation) or appointed by shareholders. They are compensated through salary or stock options. They can be dismissed from their posts by shareholders or in instances of violations of fiduciary duty, which includes selling board seats external interests and trying to influence votes in favor of their own companies.
Effective boards are able to balance management’s concerns with the interests of stakeholders. vision, and typically include representatives from both sides of the organization. These members are typically chosen because of their experience and expertise in the field, making sure they have the necessary skill sets to effectively guide the business. They must be able to identify and assess risks, formulate strategies to minimize them and monitor the performance of management.
When selecting new members for your board, be sure to consider the time commitment and other responsibilities they’ll have outside of their work. It is also important to know their availability and whether they have conflicts of interest. Minutes of meetings that are precise will ensure that board members know their responsibilities and roles. This will also ensure accountability for any decision made. Lastly, it’s important to develop a pool of prospective candidates early and to spread the word about the board’s opportunities. This will enable you to identify candidates who are qualified before their period is over, and avoid a delay in strategy.
