A board of directors plays an essential role in the governance and management of a business. The board is comprised of individuals with diverse backgrounds and talents that are not a part of the management team or the company. This means that they function independently of the daily management tasks of the business giving a fresh perspective on the strategic issues that may arise.
A corporate board’s primary function is to define the company’s vision, mission, and goals. This is usually done in conjunction with the CEO or general manager of the company. The board will also help the company in achieving its goals through the development of a strategic plan and plan to manage risks. Furthermore, the board could give the company valuable networking and business contacts.
Another major responsibility of the board is to ensure that the company operates lawfully and in accordance with its stated mission and goals. This includes ensuring the board understands the legal documents of the business, such as bylaws and articles of incorporation and applications for tax exemption status. The board also ensures that the business adheres to its legal reporting requirements.
The board is also responsible for hiring and determining compensation for the CEO, as well as overseeing the management of the company. The board also oversees the company’s financial statements and helps the chief financial officer to develop short and long-term strategies for the company that are based on a SWOT study. The board is also responsible for evaluating its own performance, and providing leadership training for all of its members.
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