By: Brent Longnecker, Founder & CEO of 1 Reputation
My friend, John Wooden, had a great quote:
“Whatever you do in life, surround yourself with people who will argue with you.”
Every great team needs that tension of input, sharing, and even disagreeing. For me, I am blessed with a family that is incredibly smart and multi-talented, and they are always sharing new ideas that I should write about. For this article, my younger brother, Tristan, shared that he thought this would be a great topic. He is one of my proofers of what I write, and he has really enjoyed proofing my last two pieces on boards.
What a great article written by Yazad Patel, and a great preface to share with you all.
The National Association of Directors (NACD) has a mission to empower directors and transform boards to be future-ready. They are truly the best -of -the best when it comes time to working with boards.
But WHY have a Board? Corporations are legally required to have a board of directors here in the United States. There are a number of important duties and responsibilities they have. In essence, it’s a key governing authority that represents the rights and interests of the shareholders and other interested stakeholders. Their goal is to independently and objectively manage the assets invested in the business and ensure leadership efficiently achieves its goals.
Whether a private/public for-profit or a not-for-profit, the board is not only key… but has a dual mandate:
ADVISORY- This is where they invest time into leadership regarding the strategic and operational direction of the enterprise.
OVERSIGHT- A board’s oversight is critical in setting direction, making policy and strategy decisions, reviewing organizational performance, and managing the risks involved. It really boils down to trust where great governance is absolutely essential for the company to most effectively and efficiently fulfill its mission.
A great board is there to help leadership perform at an optimum level, foresee future threats and opportunities, and avoid costly mistakes. If one gets the right board, then one will have one that:
1. Improves Business Performance
2. Can Help in Finding Additional Funds
3. Ensures Greater Leadership Accountability
4. Enhances Better Compliance
5. Reduces Risk… and
6. Provides Sound Strategic Oversight
But bottom-line, a board is ONLY as effective as their ability to get and process information about the entity they are responsible for. Too many entities—especially CEOs—are reluctant to share. They see themselves as autocratic and not to be questioned. However, for those leaders that are confident and understand the importance of sharing and being transparent, performance is a key differentiator.
So, just know -- whether publicly traded; privately owned, or a not-for-profit -- boards make a difference AND make you better!
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Enjoy this article my brother found for me to share: 5 Reasons Why Every Company Needs a Board of Directors.
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