17 Ago Choosing a Board of Directors

A board of directors is responsible for overseeing the business of a company whether it’s private or public company, coop, business trust or a family-owned entity. Its members may be elected (bylaws or articles of incorporation) or appointed by shareholders. They usually receive compensation for their service, either with salary or as part of a stock option plan. Fiduciary duties or shareholder violations could remove them from their positions, such as selling board seats to outside due diligence process interests and attempting vote rigging to benefit their companies.

Effective boards balance the needs of stakeholders and management’s vision, and usually incorporate members from both inside and outside the company. They are typically selected for their expertise and knowledge in the field, making sure they have the right skills to effectively lead the business. They must be able to recognize and assess risks, devise strategies to reduce them, and monitor the performance of the management.

When choosing new members for your board, ensure to consider the time commitment and other responsibilities they have beyond their work. It is also important to know their availability and if they have conflicts of interest. Meeting minutes that are detailed will help ensure that board members know their roles and responsibilities. This will also guarantee accountability for any decision made. It is also essential to establish a list of potential candidates early in the process, and also to spread the word about the board positions. This will help you identify candidates who are qualified before their period is over, and avoid the risk of a delay in the strategy.