The Importance of a Well-Designed Board of Directors
A board of directors is a body which oversees and safeguards the long-term interests of its shareholders. The board is comprised of highly experienced members with a variety of skills and experience, a strong board is crucial for every business.
Traditionally, boards have supervised the management teams while assisting and the approval of strategies proposed by executives of companies. Today, however a well-designed board directors can offer proactive leadership on important issues like corporate strategy and vision, risk and opportunity management, innovation, talent, sustainability, and succession for leadership.
The board of a company typically consists of both outsiders and insiders. An inside director is a company executive, whereas an outside director is not employed by the company. To be considered an independent director, the director must not have material ties with the company.
When assembling your board, make sure you choose those who are passionate and knowledgeable in the field. It’s also important to have people with different skill sets and who are able to bring creative problem-solving, and innovation along with strategic thinking. You should also look for experts in niche areas in areas such as finance, marketing, or capital raising.
It’s vital to recognize that as an official on the board you are a fiduciary and are legally accountable for the company’s decisions at a high level. If you’re shareholder, you also have the ability to vote for board members during proxy voting season. If you’re planning to vote for a board member, make sure to go through their proxy documents carefully and ensure they are independent.
