The Importance of a Strong Board of Directors

A board of directors is the legal responsibility for making top-level decisions. This includes appointing and firing the CEO, directing the strategic direction and making sure that the company achieves its objectives. This group is made up of experts, respected individuals and former executives selected from the community. They are accountable for establishing the corporate governance.

A well-functioning board has a clearly defined mission and operates with open communications and respect for the diverse views of its members, and accountability to shareholders and other stakeholders. It also has independent board members that are free from conflicts of interest and have an optimistic view of the future of the company. A formal orientation process, establishing relationships with other members, and committing to meet regularly are vital.

Alongside business acumen An effective board member has an intellectual curiosity and is competent to ask management and other members constructive questions that challenge group thinking and aid Board Directors in making the best decisions. A board member’s experience in a specific field is a significant asset.

Boards are increasingly taking on additional responsibilities, such as strategic planning managing risk and resilience, diversity and inclusion, and technology and digitization. They should be more technologically knowledgeable, and have a greater part to play in the hiring of CEOs and other senior leaders. According to McKinsey COVID-19, the pandemic taught boards to be more proactive when dealing with emergencies and planning for uncertainty.