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Structure

The document discusses the structure and development of boards of directors. It explains that boards have different positions like chairman and CEO. They are responsible for oversight of the company and stakeholders. The board ensures executives act in the best interests of the company. It also discusses evaluating the current board composition, revising the board structure, conducting skills audits, and providing regular refresher training to develop board members.

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Vengatesh Sl
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6 views

Structure

The document discusses the structure and development of boards of directors. It explains that boards have different positions like chairman and CEO. They are responsible for oversight of the company and stakeholders. The board ensures executives act in the best interests of the company. It also discusses evaluating the current board composition, revising the board structure, conducting skills audits, and providing regular refresher training to develop board members.

Uploaded by

Vengatesh Sl
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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STRUCTURE AND DEVELOPMENT OF BOARDS

Introduction:
BOD members hold different positions within the panel.
The composition of the board varies as per the company and
state laws. For example, Amazon’s board of directors contains
official positions such a chairman, directors, CFOs, segment-
wise CEOs and VPs, etc. The board size is limited by a
company specifying the minimum and maximum limit in its
Articles of Association. Organizations commonly have 3 to 31
directors. Let us look at some designations and positions
common to a BOD in public corporations.
Responsibilities of Board of Directors:
The board of directors’ foremost responsibility or duty is
towards the company’s stakeholders. Here, the board ensures
that the company doesn’t risk the shareholders’ and
investors’ assets. It frames policies for dividends, payouts,
present their perspective to the organization, etc.
Another important board of director function includes
holding the annual shareholders’ meeting. In such board
meetings, the panel announces annual dividends, elects and
appoints new members and high-level executives, and
changes corporate rules.
The BOD builds a company’s foundation by framing its vision,
purpose, and mission. The board ensures that the executive
board of the company is working as per organizational goals

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and plans. Company executives hold answerability to the
board and must act in the best interest of the firm and its
stakeholders.
The board also takes crucial strategic decisions and plans for
mergers and acquisition, stock split etc. The BOD’s also votes
and elects the company’s chief executive officer (CEO). It can
also sack a CEO who is bringing problems to the firm.
It ascertains compensation for the organization’s top officials.
It even amends and approves the company’s annual budget.

Structure of Board of Directors:

Steps for director development:


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Evaluate the current composition:
The composition of the board is vital in director development,
as it dictates the array of competencies and experiences, as
well as attitudes, that make up the board. Understanding your
current board composition allows you to decide what training
would benefit the individuals and, therefore, the collective.
This will form the basis of your recruitment strategy.
Revise board structure:
Based on the discussions you have about composition , you
can expand to look at the structure of the board as a whole.
How can it be improved to facilitate a better flow of
information and decision-making.
Write down role descriptions:
Almost every job that someone applies for has an extensive
role description, detailing exactly what the company will
expect of the successful candidate. It makes sense that the
board of directors works in the same manner. When new
directors are recruited to the board, they are there for a reason
and not just to make up the numbers around the boardroom
table. Each director should understand what is expected of
them so that they can focus on how best they can contribute to
the success of the organisation’s strategy.
Conduct a skills audit:
Once you have role descriptions, you can audit the skills
possessed by your current board and analyse how they can be
developed in order to fulfil those role responsibilities.

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If a director is expected to understand the market in-depth, but
they have only basic knowledge of the industry, this is a skill
that you need to develop through training or recruitment.
Personal development training is one way to address this
skills gap. In addition, you could organise team training
sessions or boot camps.
Set a clear vision:
In order to further hone your audit, you need to understand
where you want to go. This dictates the skills you need to
achieve your aims. Having a clear vision of the board
contributes in the same way that writing specific role
descriptions does.
It provides goals for directors to work to and a way of
measuring progress. If you can benchmark where you are and
understand where you want to go, it is easier to see what
needs to change to help you achieve your strategic goals.
Carry out annual reviews:
Board evaluations are essential to ensuring directors are
successfully working towards the collective vision. By
understanding what you have or haven’t achieved in the
preceding 12 months, you can shape the direction of work for
the next year in a manner that will increase effectiveness
annual board review looks into the work of the board
individually and as a collective, uncovering skills gaps,
collating feedback clarifying objectives and much more.
Using Boardclic’s..

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Board Evaluation tool, you can utilise this benchmark data to
understand what success actually looks like in your sector and
to give you a competitive edge over your peers.
Organise refresher training every year:
Induction is one thing but regular training should also be a
part of your director development programme. It is also
important to refresh directors’ existing competencies every
year. This helps to foster a culture of continuous
improvement, which encourages board members to keep
striving to greater heights.
The best performing boards do not rest on their laurels but
spend time reflecting on their skill sets, improving and
expanding them.
Conclusion:
In conclusion, building and effective board requires a clear
understanding of the key elements, structures and
development strategies that are not most effective by
implementing these strategies and continually assigning and
improving your boards you can create a board that is
successful and efficient.
Reference:

https://www.wallstreetmojo.com/board-of-directors

https://boardclic.com/board-performance/board-of-
directors-development/

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https://www.sketchbubble.com/en/presentation-board-of-
directors-structure.html

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