The board of directors, in simplest words, consists of individuals selected by the company shareholders. Shareholders elect directors to run the corporation on their behalf as they have the required skills, expertise, and experience in dealing with these affairs.
The core responsibility of the board of directors is effective corporate governance, which is a comprehensive and complex process. However, thanks to tech advancements, such as board portal software, corporate governance has been made easy for the board of directors.
Today’s discussion is about the role of the board of directors and how board management software has made things easier for boards.
What is a board of directors?
A board of directors or directors’ board is a group of skilled individuals elected by the shareholders of the company. It is a governing body responsible for setting strategies and overseeing the management of the organizations.
It is important to note that directors are internal employees of the company, and even a major shareholder can be a director on the company board. Furthermore, directors are not directly involved in business operations. Their job is to set basic governance policies, and departmental managers are supposed to follow those policies while making guidelines for departmental operations.
Role of board of directors
The board of directors has numerous responsibilities defined properly. However, in a broader term, they have the following roles.
1. Recruitment and management of general manager or CEO
There is a reason to start the list with this one because hiring, compensating, supervising, retaining, or firing a general manager or CEO is one of the most important roles of any board of directors. General Manager is a very crucial role in company management as it brings financial success to the company, and the selection of the right candidate is vital.
2. Selection of board chairman
Once a board of directors is in order, its initial responsibilities include the selection of the board president. The board president is the senior-most figure in the board structure. President or chairperson is responsible for chairing the board meetings and maintaining order.
3. Provision of the right direction for the organization
The board of directors is the highest level in the organizational hierarchy, and it is responsible for directing the organization toward the right path. This includes setting the company vision, mission, and goals or objectives. The board generally involves the general manager while setting organizational goals.
4. Development of governance system
BOD is also responsible for developing a policy-based governance system. It is important to note that the governance model must be based on “articles of governance.” The board sets rules and regulations for itself and the general manager.
Moreover, the governance model is structured in broader terms, allowing the general manager to make adjustments as per the organization’s interest. The governance system defines how the board will interact with the CEO, the structure for board meetings, voting rights, etc.
5. Legal obligation to protect shareholders’ interest and corporate assets
BOD is primarily responsible for protecting corporate assets and shareholders’ interests and making decisions according to the best of their skills and judgment. Assets may include the company’s human capital, property, plant, equipment, and facilities.
6. Management and control function
Boards are responsible for monitoring the organizational activities to maintain transparency and evaluate performance. Directors can hire auditors and supervise the auditing process. Audits make sure that everything is done timely and in the right order.
Role of virtual board software in corporate governance
Virtual boardroom software has immensely simplified and automated the corporate governance process; here is how.
1. Remote access to board material
In order to perform governance responsibilities, board members need board materials such as board books, meeting minutes, and other corporate documents. Instant provision of these documents in a paper-based documentation model is challenging.
However, a virtual boardroom is a cloud-based data repository that can be used for storing, accessing, and sharing board material from anywhere, anytime. Board members can readily access, download, or print documents stored in the boardroom, and that too without an internet connection.
2. Paperless meeting solution
A board portal is a tailor-made solution for online board meetings, making it extremely easy for boards to arrange monthly, quarterly, semi-annual, and annual board meetings. In this regard, here is what board portals can help with:
- Creating and sharing board agendas online
- Conducting audio and video board meetings
- Allowing meeting participants to cast votes in meetings electronically
- Signing documents or contracts with the help of the electronic signature feature
Virtual boardrooms have monitoring tools that make monitoring easier for board management. This way, the boardroom administration can keep a record of every action performed in the boardroom. On top of that, modern board portals have a screen recording feature that can be used to create video footage of any board meeting or other important activities.
The board of directors is the backbone of any organization. It is responsible for setting organizational goals, hiring the CEO, making policies, monitoring the organization’s activities, and making sure that the business is heading in the right direction. In short, boards’ core responsibility is effective governance, and virtual boardrooms are helping them do that.
If you consider going for a board portal solution, we recommend you check some reputable board meeting software reviews. You will find some objective comparisons, in-depth analyses, and unbiased customer feedback that will guide you towards making the right choice.
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