Choosing a Board of Directors
A board of directors oversees the activities of a business entity (private or public company, non-profit organization co-operative, business trust, or family-owned entity) and determines how the entity will be managed. The members are elected (bylaws or articles of incorporation) or appointed by shareholders. They are compensated through stock options or salary. They can be dismissed from their posts by shareholders or in cases of breaching fiduciary duties, for example, selling board seats to external interests and trying to influence votes in favor of their own businesses.
Effective boards are able to balance management’s concerns with the interests of stakeholders. vision, and usually incorporate representation from inside and outside the organization. They are usually chosen due to their industry knowledge and experience, making sure that they have the right capabilities to effectively manage the company. They should be able of identifying and assessing risks, implementing strategies to reduce them, and evaluating the performance of management.
When deciding on new members to join your board, be sure to consider their time commitment they have beyond their work. It is also important to know their availability and if they have any conflicts of interests. Detailed meeting minutes are essential to ensure that all board members are aware of their roles and responsibilities, while ensuring accountability for any decision. Lastly, it’s important to develop a pool of prospective candidates early and make sure to inform people about opportunities for board members. This will allow you to identify competent candidates before the term is up, thus avoiding a delay in your strategy.
