The Importance of Board Composition

In recent times, investors have centered on the importance of board directors. Boards are comprised of people who each bring their own expertise, knowledge and networks to the table. However, the fundamental goal of any effective board is to work as a group to monitor the performance of the company and help the CEO.

To accomplish this to achieve that goal, a board needs to be structured to be efficient and equipped to fulfill its function. This is often accomplished by building a robust team that can find the truth, and act as an essential sounding board.

It is generally recommended that boards have an assortment of experienced and first-time directors to ensure a balanced mix of perspectives and expertise. The key to this is having a clear framework in place that permits nominating committees and the board in general to determine the skills and talents that are required to make the ideal candidate for a director position.

A matrix of the character traits of board members is an effective tool that can be used to help guide the selection process. It is crucial to keep in mind that the mere fact that someone has certain characteristics does not mean that they are the best fit for the position.

A specific kind of obstacle to changes in the composition of the board can occur in organizations that are led by one or more of the founding fathers who believe that they have the best idea and don’t want to take on the risk of change. This can result in a “founders syndrome” in which the nominating committees do not recognize the need for fresh talent and a new board composition.

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