The roles and responsibilities of a board of directors
From the bottom to the top, every role within a corporation board chair comes with distinct definitions, responsibilities and duties. Each role of a board of directors was designed to manage a specific purpose within the organization.
Board roles and responsibilities need to be clearly defined. The organization's bylaws typically outline, duties for the board, board chair, corporate secretary, general counsel and committees. The duties and responsibilities for C-suite level executives and senior-level managers are usually outlined within the written job description for the role.
Clear communication and expectations for transparency are prime factors in effective collaboration within every role of a corporation — oftentimes made easier with board management software. In a perfect corporate world, there shouldn't be any gaps or overlaps. Each organization does well to customize the roles according to their needs. Well-defined role definitions and responsibilities are a good way to keep everyone in their own lanes.
Roles need to be evaluated periodically, especially during times of drastic change or growth, so that the overall design continues to meet the needs of the organization. Boards should allow for some flexibility as the corporation's needs change. Corporations get maximum results when everybody works together, from the entry-level employees to the C-suite executives and the board of directors.
Here's a basic rundown on the roles and responsibilities of every corporation's major players:
Board Chair Roles and Responsibilities
Board chairs interact with nearly everyone in the organization, so it's essential that the board selects a person to fill the role who can meet the strong expectations that come with it. The primary role of the board chair is to lead and guide the rest of the board. The board chair also serves as the direct liaison between the board and management. The board chair's duties require them to stay in the loop on all board activities. To this end, the board chair serves as an ex-officio member of all committee meetings. Experienced board chairs know that they must develop solid relationships with the board directors, the CEO, managers, the corporate secretary and committees in order to lead effectively.
The board chair's responsibilities includes helping the corporate secretary to write the agenda, which is used as a tool for facilitating board meetings efficiently. During meetings, the board chair guides the rest of the board by focusing on the organization's vision, mission and strategic direction. It's critical for the board chair to set a tone for the meeting that sets the stage for respect, collaboration and decision-making. Many corporations find that the most efficient way to govern is to form an executive committee that acts as a steering committee to prioritize issues for the full board. The role of board chair is an influential position on an executive committee and the full board to drive the agenda and to identify priorities.
Most people who serve as board chair are keenly aware that they need to develop a trusted relationship with the CEO and other executives. In a mutually beneficial relationship, the board chair acts as a mentor and advisor to the CEO. Working collaboratively, the board chair helps the CEO to translate the board's strategic plans into action.
The board chair needs to be willing to ask the CEO the hard, probing questions that come from the board, and be willing to work in tandem with the CEO during times of crisis. Both parties work best together when the board chair maintains an open-door policy in order to keep the lines of communication open. Board chairs must also be mindful that their roles are vastly different from the CEO's responsibilities. It's crucial that the board chair doesn't usurp the CEO's authority or overstep the CEO's role.
The board chair also needs to develop a strong relationship with the board directors. The board chair needs to facilitate board meetings in such a way that the board can do its own work. This duty includes encouraging all board members to be actively engaged. The board chair also typically participates in annual board member orientation, onboarding and development.
The bulk of board work happens in committees. The board chair makes recommendations for committee chairs and seeks approval from fellow board directors. To stay in the loop on committee work, the board chair typically serves as an ex-officio member of all committees. The responsibility here is for the board chair to align committee work with the vision and mission of the company.
Roles and Responsibilities of the Board Directors
Board directors of today are expected to represent independent and diverse perspectives. The main role of a board of directors is to perform the duties of strategic planning and oversight. While these terms are used often, it's important not to diminish these duties, as they are the backbone of successful business planning.
The purpose of a board of directors is much more than iconic figureheads. Boards typically look for specific qualities in choosing board members to fill vacant seats. Board members expect their fellow board directors to be willing to ask tough and probing questions to vet all sides of an issue. Board directors need to be well-informed and fully engaged with all major issues that affect the corporation. Identifying risks has become an integral part of board work because risks are becoming increasingly numerous and complex.
When corporations hit bumps in the road, all fingers typically point back to the board of directors. Board directors must be willing to act quickly and responsibly when they need to take action to comply with fiduciary responsibilities or to uphold good governance standards. A crisis may occur at any time. Board members' responsibilities state that they need to stand ready to thwart potential crises and to manage developing crises, so they don't adversely affect the corporation.
Roles and Responsibilities of the Corporate Secretary
One of the busiest and well-known people in an organization is the corporate secretary. Corporation laws in every state require corporations to appoint a corporate secretary. When talking about the role of the corporate secretary, it's prudent to mention that the role is evolving along with recent corporate developments. Corporate secretaries are now considered senior positions with major governance responsibilities.
The duties and responsibilities of today's corporate secretaries often call for the role to be filled by a senior board member with certain areas of expertise. Corporate secretaries are considered to be legal representatives of the corporation. Many corporations prefer to choose candidates for corporate secretary that have expertise in accounting or law. In fact, some corporations require that the role be filled by a lawyer. Some corporate secretaries perform dual duty as general counsel or another legal role.
Keeping in mind the needs of the organization, most corporations expect the corporate secretary to have a master's degree in administration or commerce, at a minimum. Some boards also expect the corporate secretary to belong to a body of professional accountants or association of corporate chartered secretaries.
Corporations describe the powers and duties of the corporate secretary in their bylaws. One of the most prominent board dutiesof the corporate secretary is to set the agenda and to make sure that all board members and other board meeting guests have the proper reports and other materials in time to review them for the board meeting. The corporate secretary also records minutes during board meetings and prepares a final copy of the minutes for the board to approve at the next board meeting.
Maintaining good governance is a large part of the corporate secretary's responsibilities, which includes helping board members with an initial orientation and ongoing board development. The secretary needs to know which reports need to be filed with regulatory authorities and when they are due.
The corporate secretary signs legal documents and bears custody of the corporate seal. For these reasons, it's also important for the corporate secretary to know and understand the history of past laws, the existence of current laws and the potential impact of future laws. This position also requires the corporate secretary to participate in regular legal discussions with the CEO, board, chair, general counsel and other corporate attorneys about legal matters.
Roles and Responsibilities of the General Counsel
The role of the general counsel must be filled by a lawyer. The board views the general counsel position as a partner in the business process that helps them make sure their strategic plans fall within the auspices of the law.
The position of general counsel must be filled by a person with unquestionable integrity. It's also a strong asset if the person has significant life and business experience.
The general counsel must know and understand the legal environment within the industry. The board also expects the person who fulfils this role to identify and pre-empt any potential reputational issues. The most effective way to do this is for the general counsel to be a part of early planning and decision-making with the board and CEO before plans get too far underway.
The general counsel and other corporate attorneys need to be willing to confront board directors and to hold them accountable about issues that threaten the company's legal compliance. There are several good reasons for corporate attorneys to attend regular and routine board and committee meetings. Attendance at such meetings keeps lawyers in the loop of current developments. Also, when attorneys attend board meetings on a regular basis, it prevents the rumor mill from perceiving a random meeting as an alarm bell. It's also important for the general counsel to have a good working relationship with the audit committee and its chair.
Roles and Responsibilities of the C-Suite
The top-level executives have come to be known as the C-suite. This often includes the chief executive officer (CEO), chief information officer (CIO), chief security officer (CSO), chief operations officer (COO), chief risk offer (CRO) and chief financial officer (CFO).
Each person in the C-suite is the final authority in their area of management. C-suite executives are responsible for working closely with the board and for overseeing the senior managers, managers and other employees to make sure that they are fulfilling the objectives and strategic plans of the board without creating undue risks.
Most C-suite executives seek to develop a good chemistry with the board of directors. It's vital that they communicate regularly and transparently with the board. They are wise to seek input from the board and accept guidance and feedback on strategy. Having a good relationship with the board ensures that C-suite executives will stand a good chance of gaining the support of the board for their ideas. The board chair plays an instrumental role in keeping the lines of communication between C-suite executives and board members open and collaborative.
While C-suite-level executives are continually challenged by the diversity and independence of the board, they do well to welcome probing questions as opportunities for responsible planning. C-suite executives need to recognize the experience of board members and to remain open-minded and flexible in their responses to the board.
It's wise for C-suite executives to acknowledge that one of the board's responsibilities is succession planning. C-suite executives sometimes encourage senior managers to make presentations to the board to give the board opportunities to continue developing an internal management talent pipeline.
Roles and Responsibilities of Senior Management
While C-suite executives have the final authority and responsibility, senior managers also play an important role in implementing the board's strategic plans. Senior managers plan and direct the work of groups and individuals. Senior management oversees such departments as accounting, marketing, engineering, customer support and operations.
Senior managers need to be able to take corrective action when necessary, either directly or through lower-level managers. They must approve hiring and firing of individuals and adhere to their department's budgeting constraints. Senior managers must keep their goals and priorities clear. At times, their role requires them to collaborate with other departments to fully execute their duties.
A Final Summary on the Roles and Responsibilities of Board Members
No one role in a corporation is more important than another. Every group and department must work together for the good of the company. In addition to each board member fulfilling their own roles and responsibilities, there are several responsibilities that everyone shares, not least honesty and integrity.
Acting responsibly means building close relationships that have responsible boundaries for independence and professionalism. Each person (role) is accountable for their own actions and should be aware of the actions of their counterparts. Overall, when each person acts in the best interests of the organization, the corporation best serves the public interest.