The Importance of a Strong Board of Directors
July 28, 2024 12:00 am | Leave your thoughts
A board of directors is legally responsible for the most important decisions, which include the hiring and firing of the chief executive officer, overseeing the strategic direction of the business, and ensuring that the company meets its goals. The board is comprised of experts, respected people and former executives who are chosen from the community. They are accountable for setting the corporate governance.
A strong board is one that has a clear goal and operates with open communications, respect for diverse viewpoints, and accountability to shareholders and stakeholders. It also includes independent directors who are free of conflicts of interest and who have a long-term view for the company’s success. The importance of formal orientation, establishing relationships with members, and meeting at the right time is vital.
Alongside business acumen an effective board member is also a person with an intellectual curiosity and is able to ask members and management questions that challenge collective thinking and assist in making the best decision. Having niche experience, such as sales or capital-raising expertise is also an advantage.
Boards are increasingly assuming new responsibilities, such as strategic planning, managing resilience and risk. They also have to manage the issue of diversity and inclusion, technological advancements and digitalization. This means that they need to be more digitally knowledgeable and have an increasing responsibility in hiring and succession planning for the CEO and other top leaders. According to McKinsey COVID-19, the pandemic made boards more proactive when addressing crisis and preparing for uncertainty.
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