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The Role of The Company Board

All organisations want to succeed and all should strive for the long-term profitability and growth that will benefit both shareholders and the company’s other stakeholders. A well-balanced and effective company Board should lead from the top and drive the company’s success.

Every Board is different and will reflect its organisation in different ways. However, in all instances Boards should be aware of the importance of impartiality when taking a decision that could affect the route and success of the organisation.

A company’s articles of association will indicate the way directors are to be appointed, who may be appointed and the number. However, the key to any successful structure is a correct balance that is right for the organisation in question. In any type of organisation across all industries, it is recommended that the company Board consist of a mix of executive and non-executive directors. It is also recommended that the same person should not fulfil the key positions of Chairman and Chief Executive.

A non-executive director is a Board member without executive responsibilities in the company and the benefit of his/her membership is to bring judgement, skills and experience that the executive directors on their own would lack. An ‘outsider’ or ‘independent’ view can be invaluable in Board decision-making.

Once a balanced composition has been established, the new company Board should complete four initial key tasks:

  1. To establish and maintain a vision, mission and values for the Organisation. This will guide and set the pace for the organisation’s operations and help to drive both the short-term and long-term goals.
  2. Decide the strategy and structure. Setting the strategy means asking where does the company want to be in 5 years? What will success look like? The Board needs to decide on a structure that will best facilitate success, before embarking on the on-going review and evaluation of present and future opportunities, threats, risks, strengths or weaknesses that relate to the achievement of these strategic goals.
  3. Once the company strategy and structure are set, the company Board must delegate authority to executive management and continuously evaluate the implementation of policies, strategies and business plans. Efficient and appropriate communication with senior management will help ensure both the effectiveness of internal controls and the progression towards shared strategic goals.
  4. Account to the shareholders and other stakeholders. The Board must ensure their actions are in the best interest of the company and shareholders as a whole, as well as taking account of the interests of other stakeholders. The Board should monitor and evaluate their communication and accountability to shareholders and other interested parties on a regular basis.

Once the Company Board is established, it is recommended that its performance and effectiveness be reviewed on an annual basis to ensure that the Board and the Organisation remain on track for continued success.