According
to a research study conducted by PwC, “Ninety-one percent of directors find
new members through director recommendations, suggesting a preference for
referrals by someone they know and trust. However, 67% use search firms.”
The
constitution of company is never complete without a Board of Directors. At the
start, it can be a single person – the lone founder – who represents the board.
But it cannot go on like this for long as you will not be able to avail the
benefits that are associated with having a board.
A board of
directors plays an indispensable role in constitution and governance of most
enterprises. The board is responsible for the firm's financial decisions and
ensures smooth running for different legal procedures. The board has the
authority to select, compensate and replace key executives, when necessary.
The major
functions of boards members include:
·
Analyzing
and facilitating corporate strategy and major plans of action
·
Reviewing
and guiding annual budgets, business plans and
risk policy
·
Setting
performance objectives & ensuring their execution
·
Monitoring
corporate performance
·
Overseeing
major capital expenditures, divestitures and acquisitions
A
nominating entity – usually the founder – first nominates the members for the
Board of Directors. The nominated members are then elected by shareholders
through voting. It is important to select experienced and responsible board
members who can contribute efficiently in the growth of the company.
If you are
looking for some effective guidance on selecting the right set of board
members, you can seek some useful advice from CEO peer groups. The stalwarts
and industry leaders from non-competitive organizations meet at a CEO conference and share their experiences and knowledge with a candid, honest,
no-holds-barred approach.
CEO groups
act as a great platform for aspiring entrepreneurs to seek help and counseling
to build a successful business entity.
In this
blog I have discussed the importance and functions of a Board of Members. In my
next blog I will suggest some tips that you should consider while nominating
directors for your enterprise. Watch this space!
