What does a board of directors do?
The main duties of a board of directors are as follows:
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Recruit, supervise and compensate managers and other key staff
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Provide direction for the organization
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Establish a policy-based governance system and enforce rules
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Protect the organization’s assets and investments
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Manage the efficiency of day-to-day operations
How does a board of directors use committees, taskforces, and advisory councils?
Although executives on a board of directors are typically assigned specific roles and areas of interest, there are occasionally matters that require specialized focus.
The groups, organized within the board, are often structured as follows:
Committees
A committee is often used to address recurring or permanent matters within an organization, such as internal accountability or fundraising.
- A standing or operating committee is a committee type that an organization uses on a continuous basis. They can be outlined in the organization’s bylaws or its board operations and policy manual.
- An ad hoc committee, on the other hand, is formed for a limited time to address a specific need. When the work of the ad hoc committee is completed, the committee is dissolved. An ad hoc committee may exist for less than a year or a year or more depending on the extent of the work assigned to it.
Taskforce
A taskforce can be formed if there is an objective that can be achieved in a relatively short time. Special events planning or analyzing a proposed merger are examples of work that can be handled by taskforces.
Taskforces typically exist for less than a year or the duration of the matter it is addressing.
Advisory councils
Advisory councils assist boards in carrying out their work by providing expertise and advice in selected areas. Advisory councils do not have any governance responsibilities and are a way to include former board members, potential board members, subject matter experts, and others in the work of the board without placing them on the board.
How does a board of directors make decisions?
A board of directors will make decisions per its bylaws. Bylaws are the internal rules and structures that establish how things will be done.
They can apply to anything, including how meetings are run, what responsibilities officers have, the organization’s purpose, etc. Bylaws must be voted on and passed by a board of directors to take effect.
Bylaws do not have to be permanent documents. They are often amended to better serve the organization, so long as the amendment is agreed upon and executed under existing rules.
An organization's consistent decision-making process will vary from one organization to another based on how its bylaws are set out.
A common framework for board decision-making:
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The chairperson or CEO will call a meeting of the directors and set an agenda
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The board will evaluate agenda items, which may consist of actions like newly proposed bylaws, bylaws amendments, or more immediate decisions
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Each item may be brought up for discussion, debate, or a vote amongst the board members
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If the action is approved, the directors can then sign it into effect
Planning for success
Within any organization, the board of directors is often responsible for making significant decisions that impact the organization and the individuals within it.
Planning for sustained organizational growth begins and ends with the people on a board of directors. Having all of the right resources available to the board to do its job is critical for future success. While there are no right or wrong ways to organize a board of directors, clearly defining roles and governance structures will prevent issues down the road.
Learn more about how Board of Directors make decisions
