The Importance of a Well-Designed Board of Directors

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A board of directors is a governing body composed of members who serve as custodians of shareholders’ interests and ensure the long-term success of an organization. Comprised of highly experienced individuals with a range of talents and experience, a strong board is essential to every business.

Traditionally, boards have endorsed and approved strategies suggested by managers while overseeing their management teams. A well-designed board can now provide a proactive leadership in important areas like corporate strategy and vision including risk and opportunity, talent, sustainability and succession of leadership.

The board of directors of a company is usually made up of both outsiders and insiders. Outside directors are those who is not employed by a firm. To be considered an independent director the director must not have material ties with the company.

When you’re assembling your team, seek out people who are passionate and have experience in your field. It is also essential to have people with diverse skills and abilities, who bring problem-solving and innovative thinking and strategic thinking. It is also important to look for individuals with specialized expertise in areas such as finance, marketing and capital raising.

It is essential to be aware that you are legally accountable and have fiduciary responsibilities as an officer. If you are a shareholder, then you are also entitled to vote for board members during the proxy voting time. If you’re planning to vote for the appointment of a new board member, make sure you read the proxy papers and ensure they’re independent.