Many of the sayings remind entrepreneurs and managers that it requires a solid team to build a great company. For public companies, the board of directors is the ultimate team that accepts overall responsibility for the success of the firm.
The board is responsible for taking important strategic decisions, for example, merging with a different firm and buying or selling shares, and distributing dividends. It also has to deal with the finance at a high level, like the setting of compensation for top executives or approval of the annual budget. The board serves as a protection for the chief executive in emergency situations, providing advice.
A well-functioning board can add tremendous value in the form of a sounding board for management giving objective feedback and providing constructive criticism. This is particularly crucial in companies that have a complicated business model or are highly controlled by law (like healthcare and financial services).
Boards are increasingly expanding their responsibilities to address issues like organizational culture and development of talent. They also need to spend more time working away from formal meetings and become more digitally educated. Frithjof the McKinsey senior consultant, says that they also need to promote a culture that is constantly learning.
It is therefore more important than ever for companies to choose directors who are ethical and competent. They should be knowledgeable about the business’s field and committed to the company’s mission. They must also have the ability to manage their time, which could be a part of committees or serving as an ambassador for a company. They must also be able comprehend the importance of maintaining a healthy balance between work and personal life.