There are many sayings that remind managers and entrepreneurs that it takes a team to build a great company. For public companies, the board of directors is the only team that accepts overall responsibility for the company’s success.
The board is responsible for taking important strategic decisions like merging with another firm, buying or selling shares, and distributing dividends. It also handles high-level finances such as determining the compensation of top executives and approval or amendments to the annual budget. The board also acts as a buffer in crisis situations, providing direction to chief executives.
A well-functioning board can add tremendous value to the company serving as a sounding board for management, giving an objective view of www.boardnearme.com/how-much-do-corporate-board-directors-get-paid/ the situation, and providing constructive suggestions for improvement. This is especially important for businesses with a complex business model or are highly restricted by law (like financial services and healthcare).
Boards are expanding their responsibilities, taking on such issues as organizational culture and the management of talent. This means they have to be more tech-savvy and work more outside of formal meetings. This also means they need to foster a culture of continual learning, according to McKinsey senior partner Frithjof Lund.
It is more crucial than ever before for companies to select directors who are competent and ethical. They should have a deep understanding within the industry of the company and be committed to the company’s mission. They should be able to manage the time commitment required, which may involve serving on committees as well as acting as an ambassador for the company. They must also be able comprehend the importance of ensuring a healthy balance between work and personal life.