Building An Effective Board Of Directors

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 For any organization to grow, it needs a diversity of skills, talents and networks. Examples of skills needed in any organization include:

     i) Legal expertise

     ii) Marketing

     iii) Financial planning

     iv) Long term strategic planning

     v) Strong leadership skills


 In addition to the skills and talents, an organization also needs important networks including:

     i) Contacts to angel investors and venture capitalists

     ii) Foundations

     iii) Government bodies


 All these networks and contacts may not be found within the organization`s team. An organization therefore needs to tap into external networks and that`s where the board of directors comes in.

Roles of the board of directors

 The role of the board is to take care of the shareholders` interests and monitor the organization`s performance. The board`s specific roles include:

i) Appointing the executive team including the Chief Executive Officer

ii) Organizational strategic planning

iii) Providing advice and guidance to the Chief Executive Officer

iv) Monitoring the CEO`s performance 

v) Reporting to the shareholders` about the company`s performance

vi) Accessing the external factors affecting the company and adjusting accordingl


1. Chairman of the board

 He is the leader of the organization and represents it as the public figure. He chairs board meetings and acts as the mentor to the CEO. In some organizations, the Chairman also acts as the CEO. Other organizations separate the position of the CEO and Chairman to ensure the independence of the board. The Chairman leads the board that monitors the performance of the CEO. Therefore, combining the two positions will limit the independence of the board since a person holding both positions cannot monitor himself. However, it depends on the needs of each organization.

2. Executive Directors

 These are directors who work in the company as part of the executive team. These directors are heads of departments and hold the C-Level positions within the company. They include the Chief Marketing Officers (CMOs), Chief Financial Officers (CFOs) etc. They are responsible for representing the company’s needs in the board. The report to the board about the company’s performance and implements the board`s strategy in the organization. The Chief Executive Officer is also part of the executive directors.

3. Investors

 In order to take care of investor interests, an organization may have one or two of its top investors occupy seats in the board. These investors may bring important contacts e.g. contacts to more investors and venture capitalists. Since some of them are seasoned entrepreneurs, they can offer useful advice on matter strategy and leadership.

4. Independent directors

 Also called non-executive directors, these are people with no role within the organization. They don`t take any part in the day to day running of the company. They might not have a stake in the company. Their role is to bring diverse experience in the board. These experience might be marketing, legal, finance, or industry expertise.

 These individuals are successful in their own fields and some of them have run successful companies. Some of these individuals are executives or retired executives in their organizations. They mostly occupy board seats as a way of giving back to the society by helping other upcoming business leaders grow their startups.


 Among the organization’s board members, some of them are chosen to perform specific roles:

  1. Treasurer for keeping the board’s financial records. The board treasurer might be the company’s CFO.
  2. Secretary for recording meeting minutes and other records.


 Each organization compensates its board members depending on its financial muscle. There are many ways of compensation including:

  1. Minority stake at the company
  2. Annual payments/perks
  3. Sitting allowances


 Board meetings are held at monthly, quarterly or any other regular intervals. Every meeting should have an agenda which should be communicated to all members prior to the meeting. Board meetings are meant to review the organization`s performance and plan ahead.

 Minutes should be recorded for future reference and reviews. Board meetings are a platform not only for discussing the business performance but also for the board members to bond and know each other at a personal level.


 An organization needs to bring together a diversity of talent and networks. A board of directors is a platform to bring diverse talents and skills in one place to brainstorm and come up with a company long term strategy. A business owner should therefore look for diversity of skills and talents in one place in order to position his organization for growth.