Every corporation must have a corporate board of directors. The overall role of the corporate board is to steer the vision and mission of the company. Fundamentally, the board of directors acts on behalf of the shareholders to ensure organizational health and return on investment. Whether you are an investor or seeking to join the board of directors, it is essential to know the role of the directors. Here is a discussion on the functions of corporate board representatives.
What Is a Corporate Board?
The corporate board acts as the highest governing authority within the management hierarchy of a corporation. Typically, the shareholders elect individuals to serve as corporate board representatives or directors on a rotational basis. The directors may have a vested interest in the corporation, work as company executives, or be independent of the company. The independent members are selected based on their business abilities and compensated for their role on the board.
Functions of a Corporate Board Representative
The directors in a corporate board provide strategic direction for the company. In this case, the directors are responsible for developing and executing the strategic plan for the company. The strategy defines the vision, mission, and goals of the organization. More so, the directors play a role in defining organizational values. Besides, the board provides oversight on organizational culture to ensure internal stakeholders promote organizational values.
Corporate board representative plays a fundamental role in the recruitment of the organization top executives. In this case, the directors search for an ideal executive officer. The search may include headhunting for top talent. Then, the directors conduct the interviews and review the compensation package for the top executives. Notably, the board of directors evaluates, monitors, and supervises the work of the chief executive officer. In this way, the organization can recruit and retain a highly qualified and motivated executive officer to oversee the company's daily operations.
Primarily, corporate board representative has a responsibility to develop and implement corporate policies. Ideally, the corporate constitution provides a guideline for developing governance policies. Subsequently, the board develops, discusses, and approves relevant corporate policies that provide the rules and regulations of company operations. For instance, the board develops the human resource and financial policies of the organization. In addition, the board representative plays a critical role in supervising the execution of the policies and often reviews the policy documents.
Fiduciary duty means that a corporate board representative acts on behalf of the shareholders to protect assets and investments. Specifically, the board ensures that all organizational assets are accounted for and well maintained. Such assets may include equipment, buildings, and even human capital. More so, the board makes sure that organizational finances are accounted for and audited. Moreover, the board ensures that the organization complies with legal requirements.
All in all, the corporate board representative oversees the proper conduct of corporate business. Understanding the role of the board directors is essential since they have oversight and fiduciary duty to the shareholders of the company.