People have many reasons for becoming involved in a board of directors. For example, some find it an excellent way to contribute to their community’s development through a non-profit organization. For others, being involved with a foundation is a way to support a cause they believe in. Still others want to either gain new expertise or contribute their knowledge. However, being a board member is generally so rewarding and prestigious that many people still seek to become board members for the prestige, without asking themselves what they can contribute.
The board of directors plays a crucial role in an organization’s structure and takes on very important responsibilities in respect of that organization. For this reason, each member’s contribution is a determining factor and should therefore be one of the key considerations when deciding to become involved in a board of directors. Similarly, recruiting board members should not be taken lightly. The organization’s health and sustainability depend on these decisions. As such, the roles and responsibilities of this function must be understood from the outset.
The role of directors and management
The board of directors and management are responsible for an organization’s governance. In defining governance, the Collège des administrateurs de sociétés refers to the International Federation of Accountants’ definition:
The set of responsibilities and practice s exercised by the board and executive management with the goal of providing strategic direction, ensuring that objectives are achieved, ascertaining that risks are managed appropriately, and verifying that the organization’s resources are used responsibly.
Directors therefore play a fundamental role in terms of the organization’s mission and values as well as its strategy, policies and compliance, among many others. Directors are also responsible for measuring the organization’s results, performance, and compliance with governing legislation and regulations. The board also safeguards the interests of the organization’s members and shareholders.
Management, for its part, handles the organization’s day-to-day activities. It implements the organization’s strategies, manages activities to create value and ensures the organization’s efficiency.
Board members have complementary roles that must be fully understood by the various stakeholders to ensure efficient organizational governance.
The director’s duties
Becoming a board member implies taking on a number of duties that have to be diligently discharged. Board members must be ethical, responsible and, above all, accountable. They must, therefore, attend meetings and be well prepared in the face of the entity’s challenges. Additionally, they are required to comply with the board’s code of ethics so as to avoid conflicts of interest.
Smaller organizations must very often call upon volunteer directors who should ensure that as directors they are appropriately motivated so they can actively support management in dealing with limited resources and budgets.
Traps to avoid
Too often, organizations have a board of directors where the roles of management and the directors are either not clearly defined or overlap. Such unproductive situations frequently lead to governance and communication problems between the board and management and can significantly hamper the organization’s development.
Additionally, board members are often individuals who, though dedicated, do not necessarily have all the requisite skills to fulfil their mandate. They may have been recruited because someone in management knows them, or because they have voiced an interest or have a specific skill, which does not necessarily mesh with the entity’s strategic directions. Board members must use judgment and be independent when selecting members.
Ideally, board members should not have similar profiles. A diversity of profiles, experience and expertise promotes discussion and, to a certain extent, a competitive spirit. Selecting board members requires as much care as selecting an organization’s employees.
There are many ways of assessing a board’s effectiveness. They can serve to determine if the board’s membership is appropriate and if it is operating in an optimal manner. Members can be assessed by third parties or by a peer review, for example, using anonymous questionnaires in specific contexts. Such evaluations provide a means for taking the necessary corrective measures and avoiding problems. Additionally, they can help to pinpoint expert profiles that can be called upon to benefit the organization.
In sum, before joining a board of directors, you need to question your motivation, as this will have a direct impact on the organization. Boards of directors, for their part, can use a variety of means to ensure their quality and effectiveness.
05 Jan 2012 | Written by :