When it comes to corporate governance, the role of a board member is one of immense responsibility and influence. As stewards of a corporation’s success, corporate board members play a pivotal role in shaping a company’s strategic direction, ensuring financial stability, and upholding ethical standards.
Read on for insight into 5 core responsibilities for effective corporate board of directors membership.
What is a Corporate Board Member?
A corporate board member is an individual elected or appointed to represent the shareholders’ interests and oversee the strategic direction and decisions of an organization.
They hold a pivotal role within a company’s governance structure. Corporate board members, no matter their board member position, are responsible for protecting a company’s overall financial health, as well as managing risks.
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Roles and Responsibilities
Members of an executive board may have varying roles and responsibilities depending on the organizations they serve and any committees they join, such as the executive committee or audit committee. However, most corporate board members are responsible for these essential roles within their organizations.
1. Fiduciary Duty
Members of a corporate board of directors have a fiduciary duty to their organizations, meaning they must act in the company’s best interests. This involves ensuring the company’s financial health through monitoring of its financial performance and making decisions that maximize shareholder value.
As part of their duty of care, board members must avoid conflicts of interest and disclose any potential conflicts to the board. They must also exercise due diligence in their decision-making.
2. Strategic Oversight
Board members are responsible for strategic oversight of the organization they serve. As part of these duties, they must evaluate and approve various strategies, including mergers and acquisitions and capital expenditures.
Strategic oversight isn’t just about endorsing plans. Board members must also actively engage with, question, and refine business strategies to ensure they’re robust, adaptable, and aligned with the company’s overarching goals.
3. Risk Management
Board members must assess and mitigate any risks to the company. This includes financial, operational, legal, and reputational risks.
As every business faces risks, board members are responsible for setting an acceptable level of threat to the company. Balancing the company’s appetite for risk with safeguarding shareholder interests becomes paramount. This involves engaging in thorough risk assessments, collaborating with management to develop risk mitigation strategies, and establishing robust internal controls to minimize exposure.
4. CEO Oversight
The chief executive officer is often responsible for making key decisions across the company. In order to ensure appropriate checks and balances remain in place, the board oversees the CEO. That may include selecting the person who fills that role and evaluating their performance over time.
5. Compliance and Ethics
As part of their responsibilities, board members must ensure the company adheres to all applicable laws and regulations. In addition, the board may lay out specific ethical responsibilities and requirements that the company must adhere to. Ethical requirements can help protect the company’s reputation, while creating a higher level of social responsibility.
Achieve Board Alignment with OnBoard
As outlined above, board members have crucial and time-consuming responsibilities, which can make it difficult for them to stay in alignment with one another. OnBoard’s purpose-built software solution makes it easier to achieve that essential alignment, while protecting the business and saving board members time.
From an agenda builder to meeting analytics, minutes builder, and even a voting and approvals platform, OnBoard provides the features a corporate board of directors needs to execute all responsibilities with precision and efficiency.
Download OnBoard’s free board meeting minutes template for an example of how the best boards write their minutes to accurately and legally reflect what occurred during the board meeting.
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About The Author
- Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.
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