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What is a Board of Directors? What Does a Board Look Like?
A corporation, whether for-profit or nonprofit, is required to have a governing Board of Directors. To explain, a corporation can operate as a separate legal entity, much like a person in that it can own bank accounts, enter into contracts, etc. However, the laws governing corporations require that a corporation ultimately is accountable to its owners (stockholders in the case of for-profits and the public with nonprofits). That accountability is accomplished by requiring that each corporation has a Board of Directors that represents the stockholders or the public.
Members of a governing Board have certain legally required (fiduciary) duties, including duties of care, loyalty and obedience (some states and countries use different terms -- for example, in Canada, the duties of care and loyalty are often stressed). For-profit Boards often are referred to as "corporate" Boards, which really is a misnomer because both nonprofit and for-profit corporations are required to have Boards -- not just for-profit corporations.
The phrase "Board operations" often refers to the activities conducted between Board members and can include development and enactment of Board bylaws and other Board policies, recruitment of Board members, training and orientation of Board members, organizing Board committees, conducting Board meetings, conducting Board evaluations, etc. The phrase "governance" often refers to the Board's activities to oversee the purpose, plans and policies of the overall organization, such as establishing those overall plans and policies, supervision of the CEO, ensuring sufficient resources for the organization, ensuring compliance to rules and regulations, representing the organization to external stakeholders, etc. The nature of Board operations and governance depends on a variety of factors, including explicit or implicit use of any particular Board model, the desired degree of formality among Board members and the life-stage of the Board and organization.
Governing Boards can have a variety of models (configurations and ways of working), for example, "working Boards" (hands-on, or administrative, where Board members might be fixing the fax one day and strategic planning the next), "collective" (where Board members and others in the organization usually do the same types of work -- it's often difficult to discern who the Board members actually are), "policy" (where Board members attend mostly to top-level policies), "Policy Governance" (trademark of Carver Governance Design, where there are very clear lines and areas of focus between Board and the CEO), etc. All of these models are types of governing Boards.
Boards can have a broad range of "personalities." For example, Boards of large for-profit and nonprofit corporations might be very formal in nature with strong attention to Parliamentary procedures, highly proceduralized Board operations, etc. In contrast, Boards of small nonprofit or for-profit corporations might be very informal in nature. Some people believe in life stages of Boards, including that they 1) start out as "working" Boards where members focus on day-to-day matters in addition to strategic matters, 2) evolve to "policy" Boards where members focus mostly on strategic matters, and 3) eventually become large, institutionalized Boards that often have small executive committees and maybe many members some of which are "big names" to gain credibility with investors. |
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It was a pleasure working with Mike. He was the perfect addition to our creative team as he came with a strong, strategic approach to business. Mike is known for delivering powerful, thought provoking sessions that drive change & increase sustainability in an organization." His advise and vision to the board is a additional strength for corporate leadership.
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