The board of directors is the mind and heart of every organization. The board’s streamlined governance and forward thinking dictate success, while poor decision-making often results to a fiasco.
Each member of the board has the power to improve the way directors collaborate. To make these improvements effectively, it is vital for the director to understand the primary board member roles, duties, and responsibilities.
Basic board of directors roles
Productive boards resemble well-oiled mechanisms with each member fulfilling his or her duties to the fullest. There are four essential roles of board of directors:
Chairperson, or the president, is the central figure among all other roles of board of directors. As the leading board member, the chairperson carries the most responsibility and has the highest level of expertise.
Qualities that make a best chairperson include passion towards the role, approachability, and objectivity. As for the duties, a chairperson is the one who:
- presides most board meetings
- serves as the main contact for the board in case of difficulties or conflicts
- develops meeting agendas
- directs committees by appointing members and assigning chairs
- enures corporate goals and objectives are met
Vice-chair, or vice-president, is essentially the next in line to the chairperson. Vice-presidents possess similar qualities as the president and support the leader in their duties whenever needed.
Vice-chair’s board member duties include:
- obtaining skills and knowledge to be able to substitute or replace the chairperson
- taking the lead when the president is unavailable
- assisting the chairperson in the execution of his or her duties
- serving on committees
- gathering information required for future corporate leadership
Secretary is the board member with the most administrative, yet crucial board member role. Every organization’s approach to the secretary’s responsibilities is different but his or her duties include:
- distributing all necessary information before every meeting
- taking the minutes of the meeting and sharing them to the members of the board afterwards
- scheduling meetings and notifying each board member of such
Treasurer is the member heading the corporation’s financial matters. This is the most demanding of all roles of board of directors as the treasurer controls all monetary flows, including spending and investing.
While bookkeeping and accounting skills can be assets to the treasurer position, this board member should also be reliable and organized as his or her main duties are:
- reconciling bank accounts and producing financial statements
- serving as the financial committee’s chair and the organization’s financial officer
- monitoring the timely submission of tax documents and legal forms
- assisting the CFO with preparing the annual budget
- reviewing the annual audit and answering audit-related queries
Assuming any roles as member of the board of directors entails complete dedication to the principal board member duties and responsibilities.
Board member duties and responsibilities
Understanding and fulfilling main board member duties and responsibilities ultimately translate into the board’s functionality.
Board member duties
Three duties sum up board member legal requirements and ethical guidelines:
1. Duty of care. Each board member’s dedication is measured through proactiveness and dynamic communication. Sincere commitment is what makes the execution of all board member duties and responsibilities effectively.
- Main takeaway: Board members show their duty of care by keeping up a pristine attendance record, following through with promises and duties, and communicating with other board members honestly.
2. Duty of loyalty. Fulfilling board member duties and responsibilities also means prioritizing the organization’s interests over individual ones. Loyal board members represent and realize the company’s mission.
- Main takeaway: Not gaining profit to the prejudice of the corporation is an excellent indicator of board member loyalty.
3. Duty of obedience. The board has to follow the organization’s rules and by-laws, even if these make it more challenging to reach the corporation’s goals. Disrespect towards governance regulation can quickly dissolve each member’s integrity and even affect the company’s reputation.
- Main takeaway: The chairperson must make sure each director is aware of their board member duties and responsibilities, including the organizational rules and guidelines.
It is good practice for the chairman to regularly remind the board of directors of their legal and ethical duties. This way, everyone on the board is on the same page and doing their best to contribute to the overall purpose.
Key responsibilities of the board members
How do board member duties and responsibilities apply in practice? Below are the top ten responsibilities of the board members:
1. Establish and fulfill the corporation’s mission and vision
Mission and vision statements summarize the board member duties and responsibilities by answering the “what” and “how” questions. The board has to determine what the goals of the organization are and how the organization will achieve these.
2. Hire, support, and assess the executive director
The board will select the executive manager to guide the company. It is also one of the board member duties and responsibilities to regularly evaluate the executive’s performance and re-hire, if necessary.
3. Manage the corporate finances
Financial statements give the board an idea of the incoming and outgoing assets. Each member must know how to assess financial statements and make informed decisions based on these statements.
4. Create and implement developmental strategies
Another one of board member duties and responsibilities is to create and execute long- and short-term strategies, which are built up from a SWOT (Strength, Weakness, Opportunities, and Threats) analysis.
5. Monitor the resource supply
Adequate resources guarantee the fulfillment of the corporation’s mission, and it is the board’s task to ensure the resource flow meets the requirement. Transparency and accountability are key to efficient resource management.
6. Recruit new board members
When boards act in the organizations’ best interests, they remain on the lookout for new people and services that can bring value. That’s why recruiting and appointing new members is among the board member duties and responsibilities.
7. Attend board meetings
Regular board meetings help directors fulfill their board member duties and responsibilities as they are able to communicate and strategize. The more organized and resourceful these meetings are, the better decisions are made for the corporation.
8. Serve in committees
All board members have to be ready to be a part of a committee or a task force. Additionally, they will need to assist the chairperson and orient other committee members on how to operate.
9. Guarantee legal and ethical compliance
Every organization follows two sets of rules: the external law and the internal policies. Ensuring that everyone acts within regulation falls under board member duties and responsibilities.
10. Maintain the company’s reputation
When all board member duties and responsibilities are correctly fulfilled, the organization’s public standing remains solid. Yet, it is still vital for the director to keep abreast of the company’s reputation and implement necessary changes when it declines.