A group of individuals elected to oversee the interests of the company and its shareholders, as well as the activities and the direction of the business, a board of directors is the governing body of a corporation. Whereas managers and employees oversee the day-to-day operations of a business, boards focus on high-level business accountability, oversight and strategy.
The board of directors usually includes both “inside directors” and “outside directors”. The board’s inside directors, also referred to as “executive directors”, are typically the senior-most executives of the business – those in the role of department director, such as Director of Finance or Director of Marketing, for example. It would be appropriate for the directors of each department to be included in the board of directors. The board’s outside directors, also referred to as “non-executive directors”, are value-add experts, specialists, wizards, or other respected persons from the wider community.
The board of directors plays a crucial role in guiding the company towards long-term success and serves as a master-mind for the corporate CEO. The tasks of the board of directors include, but are not limited to: Setting Strategic Direction, Oversight & Governance, Financial Oversight, Executive Management, Stakeholder Engagement, and Ethical & Social Responsibility.
Setting Strategic Direction
- Defining and establishing the company’s core values, purpose, vision, mission
- Setting strategic goals
- Approving major business decisions, plans, and strategies
Oversight & Governance
- Monitoring the company’s performance and ensuring compliance with laws and regulations
- Evaluating and guiding the company’s risk management strategies
- Identify and manage risks that may impact the company’s operations, reputation, or financial performance
Financial Oversight
- Approving budgets and financial statements
- Ensuring the integrity of financial reporting and auditing processes
- Making key decisions on issues such as mergers and dividends
Executive Management
- Hiring, evaluating, and, if necessary, replacing the CEO and other top executives
- Setting executive compensation and succession planning
- Provide guidance and advice to the CEO and executive team
- The board ensures the company has adequate, well-managed resources at its disposal to support the CEO, and executive team allowing them time and space to act responsibly
Stakeholder Engagement
- Communicating with shareholders and other stakeholders
- Balancing the interests of various stakeholders, including employees, customers, and the community
Ethical & Social Responsibility
- Promoting ethical behavior and corporate social responsibility
- Ensuring the company adheres to its values and ethical standards
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