The Board of Directors is a corporation’s governing body that is elected to represent shareholders. The Board’s duties are widely misunderstood. Floro Business Strategies is here to debunk 5 of the most popular myths about Boards of Directors:
- The Chairman Should Always be Independent
The Chairman is the presiding officer of a Board of Directors. Many believe that the Chairman should be the independent, primary decision-maker. However, the purpose of the board is to hold key chiefs accountable and make impartial decisions for the organization. Therefore, strong boards consist of a diverse range of people with different specialties that are motivated by a common goal.
- Boards Should Have Term Limits
Because the board is tasked with making impartial decisions, many believe that board members should have term limits, as to ensure that all are acting with the organization’s best interests at heart. Furthermore, many believe electing new board members on a regular basis is a great way to recruit new talent.
While board rotation is a healthy way to maintain the integrity of its members, it isn’t totally necessary. Often, seasoned board members show greater loyalty and passion for the organization they serve.
- Strategic Planning Follows the Same Process
Many believe Boards of Directors should follow strict protocol when making decisions for the organization, as to avoid discrepancies and increase efficiency. However, this approach does not always provide the best results.
For every problem, there is a unique solution. No matter what the board is facing, every major decision should be given great thought and consideration. Every decision should have a process that is unique and appropriate for the scenario.
- Nonprofit and For-Profit Boards Are Different
From their mission and values to the audiences they serve, nonprofit and for-profit organizations are very different. Regardless, both types of organizations should have a Board of Directors.
A Board of Directors probably looks vastly different from organization to organization, right? False! Whether the organization is nonprofit or for-profit, most boards have a very similar structure — the key difference is that nonprofit boards deal with volunteers and donations while for-profit boards represent shareholders.
- Laid Back Boards Are the Best
Many executives believe the best boards have a more hands-off approach. After all, a managerial approach can rub people the wrong way! However, this couldn’t be further from the truth.
Boards with a more hands-on approach are thorough and thoughtful when making decisions that impact the organization and its stakeholders.
At Floro Business Strategies, we offer knowledge in business alignment, strategic planning, succession planning, executive planning, and distribution channel development. We believe we would be an asset to your Board of Directors! Interested in learning more? Contact us today!