What is a Board of Directors? “A board of directors (B of D) is a group of individuals, elected to represent shareholders. A board’s mandate is to establish policies for corporate management and oversight, making decisions on major company issues.” – Investopedia
Corporate Board members get paid. But for what?
I have been on a number of boards – non-profit mainly, but also corporate. It was often called Board of Advisors rather than directors. I have been on boards (and Committees) with “empty suits”, people who just don’t participate and bring nothing to the table.
When reading this article from USV, I got to looking into it. Bethany Crystal at USV says maybe “the greatest value I brought to the table was me showing up.” Showing up and being ready. I was hoping there was more but this is what I found.
“Board members are ultimately responsible for the legal, fiduciary duty and best interest of the [org]..” from the Omaha Foundation. “Board members today are expected to sit on at least one (and usually more) committee’s, solicit their circle of influence for gifts, assist with implementing strategic plans and visions, perform executive director reviews and much more. Basically, it can become a second full-time job – especially for volunteers who assume leadership positions.” [via WSJ].
For non-profits, what is the role of the CEO or Executive Director? “Ultimately, to me, the success of the board is really dependent on two things. First, that the volunteer board leadership is an exemplary role model and holds their peers accountable. And second, that the executive director is assisting in managing the board and their needs. It only works harmoniously when both pieces are in alignment.” One is strategy; the other is execution.
By the way, Board Members can be held personally liable since each board member has a fiduciary responsibility. (Make certain the D&O insurance is paid in full!)
On corporate boards, “The board has a fiduciary duty with respect to the shareholders; that is, the board has financial and other responsibilities to keep the corporation running efficiently, so the shareholders don’t lose money.” [source]
“Specific duties of the board of directors and individual board members, committees, and officers are set by the corporate by-laws. The bylaws establish the specific duties of the board of directors and establish rules of procedure for the board.” The primary duties include Mission, Vision, Executive Oversight. (More detail HERE and THERE.)