The Importance of a Strong Board of Directors

A board of directors is legally accountable for high-level decisions, including the hiring and firing of the chief executive officer, overseeing the strategic direction of the business, and ensuring that the company meets its goals. The majority of them are ex- and current executives, experts and respected persons who are chosen from the larger community (called outside directors), and it is also responsible for establishing the guidelines for corporate governance.

A well-functioning board is one that has a clear purpose and operates with openness to communications and respects the diversity of opinions. It is also accountable to its shareholders and other stakeholders. It also includes independent board members who are not afflicted from conflicts of interests and take an overall view of the company's future. A formal orientation process and establishing relationships with other members, and committing to meet at the right time are essential.

A good board member is not just business-savvy, but also intellectually curious. They are able to pose constructive questions to the board and to other board members that challenge their thinking and help them make the best decisions. Having niche experience, such as sales or capital-raising expertise can be an asset.

Boards are increasingly assuming additional tasks, such as strategic planning as well as risk and resilience management as well as diversity and inclusion and technology and digitization. They should be more technologically literate, and play a greater role in the hiring of CEOs and other senior leaders. The COVID-19 virus has taught boards to be more proactive in dealing with uncertainties and crises, according to McKinsey.