Creating a Board of Directors is an important task for a growing company. If you own your business, you will no doubt be tempted to place friends, family, and insiders on your board. Though there is nothing wrong with that in a private organization, you will want to consider to branch out past your inner circle to bring in people with expertise who are willing to challenge you. By achieving the right mix on your board, your company can grow to heights you never dreamed of!
If you operate as a publicly owned company, the board is gaining transparency and attention due to recent illegal activities. Active boards engage in oversight of the company to ensure it is operating ethically and performing tasks for the right reasons.
Composition of the Board
In a typical organization, the Board of Directors is composed of:
The Chairman of the Board: responsible for leading board meetings and is typically closely involved with the management of the company. Can sometimes be someone independent of the CEO, though often is the CEO.
Vice-Chair: responsible for Chairman’s duties when the Chairman is not present.
Committee Chair: other board members can serve on committees or oversee committees as a Committee Chair. Common committees include Executive Compensation, Audit, Ethics, Public Relations.
Treasurer: responsible for board finances and overseeing company finances.
Secretary: keeps minutes of board meetings and the board calendar.
Board Member: attends meetings and performs tasks as assigned by the board.
Purpose of the Board of Directors
1. Select and appoint a chief executive to run the organization.
2. Account to the public for the organizations finances, products, and services.
3. Protect shareholder value.
4. Assist in vision and goal setting for the organization.
Setting Up Your Board of Directors
1. Decide how many members you want on your Board of Directors.
2. Decide if you are going to be the Chairperson or find a different Chair.
3. Determine how much (if any) money you will pay a member of your Board.
4. Contact potential candidates and interview them to guage their interest and the value they will bring to your organization.
5. Set the structure and dates of your meetings.
This free complete toolkit for boards is invaluable when setting up your Board of Directors.