role of the board of members
Board members are entrusted with the authority to ensure that an organization operates legally and in the best interest of shareholders and other stakeholders. They also oversee, monitor and provide guidance so that a company can achieve its strategic goals. They operate independent of daily management and the day-to-day business operations of a company. A well-functioning board is essential to the success of a corporation, whether it is public or private.
The board identifies the key strategic issues and establishes long-term goals for a corporation. The board also determines what specific steps must be taken to achieve those goals. The board is often made up of a mix of individuals with specific skills, knowledge and experience in a particular field or industry. For example, the board might include individuals from the areas of insurance/managed care, medicine, law, finance/banking, real estate, marketing and information technology. Many corporate boards use specialized committees to help perform their duties.
A major responsibility of the board is the recruitment and selection of new board member. The board is responsible for finding individuals with the right mix of skill, knowledge and experience to take the organization to the next level. It is also the responsibility of the board to assess its own performance and identify gaps that need to be filled.
What is the role of the board of members?
In addition to recruitment and selection, the board must also establish the structure of its meetings, policies and procedures. The board must define its responsibilities and decide which tasks are solely the responsibility of the board and which should be delegated to management. The board must then develop the appropriate policies to govern these functions.
Ideally, the board should also have clear rules about tenure and compensation. It is important to set terms of office and a process for evaluating and removing board members who are not performing satisfactorily. Many boards set term limits, such as two or three years. This helps to prevent an overly entrenched board and allows dissatisfied members to vote for someone else.
Another role that a board must play is maintaining strong relationships with the community in which it operates. This requires a board to be familiar with the governing documents and community’s policies in order to effectively communicate with residents and answer questions.
The board should also be aware of the needs and expectations of the people who the organization serves and bring those into the boardroom to better understand how the board can meet those needs. This is particularly important for not-for-profit institutions.
It is the duty of a board member to act with the highest degree of honesty and loyalty. This includes not taking action on any matter outside the scope of their authority and not using their position to advance their own personal interests or those of family members or friends. This is known as fiduciary duty.