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A board of directors is the legal responsibility for making top-level decisions. This includes deciding to hire and dismiss the CEO, overseeing the strategic direction and making sure that the business is meeting its objectives. The board is typically comprised of former and current executives and experts, as well as respected people selected from the larger community (called outside directors) and is responsible for setting the corporate governance guidelines.
A strong board has a clear mission and operates with open communication with respect for differing views and accountability to shareholders and stakeholders. It also includes independent board members who are free from conflicts of interest and take an optimistic view of the company’s future. The importance of a formal orientation, creating relationships with members, and arranging meetings on the right time is essential.
In addition to having business acumen A good board member is also an intellectual and is capable of asking members and management questions that challenge collective thinking and assist in making the best decision. A board member’s expertise can be an asset.
Boards are increasingly assuming new responsibilities, including strategic planning, resilience and risk management. They also have to tackle issues related to diversity and inclusion and digitalization and technology. As a result, they have to become digitally knowledgeable and have an increasing role in hiring and succession planning for the CEO and other leaders. According to McKinsey COVID-19, the pandemic taught boards to be more proactive when addressing issues and planning for the future.