A board of directors is a set of people elected by shareholders to represent the interests of a company. The board comprises the chief executive officer (CEO) and high-ranking managers, and other eminent persons who are not directly involved in day-to-day operations. It establishes high-level strategies and supervises management, and meets regularly to review performance and track the progress. It also approves major corporate transactions, such as mergers, purchases stock splits, new launches of products. The board also decides on policies on compensation for the CEO and other executives, assuring www.managingbiz.net/2020/03/24/who-should-organise-effective-communication-between-partners-and-the-board-of-directors/ they are in line with company goals. It also manages risks and supervises the financial performance and operations which includes the preparation of annual budgets and financial reports.
A good board needs diversification of viewpoints and knowledge. The best boards are highly engaged and proactive, addressing issues that could impact their companies such as strategic focus and culture, succession of leadership, talent management, governance, risk and resilience, sustainability, digital transformation, and the possibility of mergers and acquisitions. They provide guidance and oversight on these issues, while also ensuring the critical distinction between their duties as a board and management.
In order to fulfill their responsibilities and roles the most efficient members of the board collaborate more closely with CEOs in order to comprehend the company’s strategy, vision, and issues, as well as the risks and opportunities. They are prepared to engage in a meaningful debate that is focused on strategic planning, oversight and accountability. They also make decisions according to the company’s best interests while maintaining independence and avoiding conflicts of conflict of interest.