The What? and Why? of Board of Directors

A board of directors (also referred to as ‘the board’) is an executive group of both internal and external stakeholders that jointly supervise the activities of the organization and make critical decisions on the direction of the organization.

Now that we have the definition out of the way, let’s discuss what this really means. Boards are in place to support the organization’s viability and growth. There are many times when board members agree and often times, they do not agree on topics, decisions and actions. This is healthy! Any suspect of ‘group think’ is terminal for an organization that is looking to driven value for their shareholders, customers, employees and owners.

Let’s take Transformation for instance. Transformation can have many impacts to an organization, which may include, Digital Transformation, Operational Transformation, Branding and Market Positioning Transformation, and Transformation by Force or a Pivot, which we saw a lot of during the COVID years.

So, you may ask… If a board of directors supports the activities, decisions, and key topics of an organization and requires diverse set of thinking across its members to objectively evaluate the path forward, why are boards so hard to participate in?

Let’s take a look at some statistics…

Q: How important are the following factors in achieving diversity of thought in the boardroom?

Additionally, from a Gartner 2023 Board of Directors Survey…

Source: 2023 Board of Directors Survey: Business Strategy in an Uncertain World. 6 December 2022 – ID G00780037. Partha Iyengar, Jorge Lopez, Irving Tyler

What does all this mean?

Boards are in need for a refresh. They need to introduce new members to the ‘table’ to foster new ideas, fresh decision making, and align to speed needed for the way business operate in today’s world. Traditional boards are a thing of the past and merit-based inclusion of board members is required, while ensuring culture of the organization is not negatively impacted or disrupted too much.

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