A board of directors is an elected group of people who represent the interests of a business. The board is comprised of the CEO, senior managers and other highly regarded individuals who are not involved with day-to-day business operations. It supervises management and formulates high-level strategies. It meets regularly to review and assess the performance of the company. It also approves major corporate transactions like mergers, purchases as well as stock splits and new product launches. The board also decides on guidelines for compensation for the CEO and other executives, ensuring they are in line with organizational goals. It also manages risk and oversees the performance of operations and financials, including preparing annual budgets and reporting.
A good board requires diverse perspectives and a range of expertise. The best boards are proactive and active, addressing issues which could impact their company, like strategic focus and culture, succession to leadership and talent management, governance and risk, digital transformation and sustainability, and the possibility of mergers and acquisitions. They provide guidance and oversight on these issues while maintaining the vital distinction between their role as a board and that of management.
To fulfil their responsibilities and duties The most efficient board members work more closely with CEOs in order to understand the company’s strategy, vision, and issues, as well as risks and obstacles. They are able to participate in meaningful discussions that is focused on strategic planning as well as oversight and accountability. They make decisions that are in the best interests of the company, while preserving their independence and avoiding conflict of interest.