Choosing a Board of Directors
A board of directors is accountable for managing a business entity regardless of whether it’s a private or public company or business trust, coop, or a family-owned company. Its members may be elected (bylaws or articles of incorporation) or appointed by shareholders. They are compensated through salary or stock options. Fiduciary duty violations or shares could cause them to be removed from their positions, such as selling board seats to external interest groups and attempting to influence the vote to benefit their businesses.
Effective boards balance the interests of the stakeholders with the management’s vision. They have members from inside and outside the organization. They are usually chosen for their industry expertise and experience, which ensures that they have the abilities to effectively lead the company. They need to be able to recognize and assessing risks, developing strategies to reduce them, and evaluating the performance of management.
When deciding on new members for your board of directors, think about their commitment to time as well as any other responsibilities that they may have outside of work. It is also important to know when they are available and if they are in a conflicts of interests. Detailed meeting minutes are essential to ensure that all board members understand their obligations and roles, as well as ensuring accountability for every decision. Lastly, it’s important to create a list of potential candidates early on and make sure to inform people about board opportunities. This will help you find qualified people before their term is up, thus avoiding a delay in strategy.