From the bottom to the top, every role within a corporation comes with distinct definitions, responsibilities and duties. An outline of board member responsibilities defines each role’s specific purpose within the board of directors and the organization.
Board roles and responsibilities need to be clearly defined. The organization’s bylaws typically outline duties for the board, board chair, corporate secretary, general counsel and committees. The duties and responsibilities for C-suite level executives and senior-level managers are usually held within the written job description for the role.
Clear communication, expectations for transparency and technology for board effectiveness are prime factors in effective collaboration within every role of a corporation. In a perfect corporate world, there shouldn't be any gaps or overlaps. Each organization does well to customize the roles according to their needs. Well-defined role definitions and responsibilities are a good way to keep everyone in their own lanes.
Roles need to be evaluated periodically, especially during times of drastic change or growth, so that the overall design continues to meet the needs of the organization. Boards should allow for some flexibility as the corporation's needs change. Corporations get maximum results when everybody works together, from the entry-level employees to the C-suite executives and the board of directors.
Here, we demystify the roles and responsibilities of a board of directors and provide insight on the following topics:
- The board of director's purpose within an organization
- Board member responsibilities as they pertain to nonprofits
- Specific board positions and their duties
Purpose of the board of directors
The purpose of a board of directors is much more than iconic figureheads. Boards typically look for specific qualities in choosing board members to fill vacant seats. Board members expect their fellow board directors to be willing to ask tough and probing questions to vet all sides of an issue. Board directors need to be well-informed and fully engaged with all major issues that affect the corporation. Identifying risks has become an integral part of board work because risks are becoming increasingly numerous and complex.
Board members of today should represent independent and diverse perspectives. The main role of a board of directors is to perform the duties of strategic planning and oversight. While these terms are used often, it's important not to diminish these duties, as they are the backbone of successful business planning.
These include:
- Providing strategic direction
- Reporting to company stakeholders
- Setting policies and budgets
- Defining and measure goals
- Managing personnel, specifically C-Suite hiring and onboarding
All boards of directors must also ensure they meet their three duties, which are responsibilities they have to the company and its stakeholders. These duties should guide all board decision-making.
- Duty of care: Appropriately use all company assets
- Duty of loyalty: Act in the best interest of the organization and its goals
- Duty of obedience: Follow the organization’s bylaws, as well as any industry laws and regulations
Board directors must be willing to act quickly and responsibly when they need to take action to comply with fiduciary responsibilities or to uphold good governance standards. A crisis may occur at any time. Board members’ responsibilities state that they need to stand ready to thwart potential crises and to manage developing crises so they don’t adversely affect the corporation.
Nonprofit board member responsibilities
Boards of for-profit organizations have a responsibility not only to their stakeholders but also anyone who is impacted by their products or services. Nonprofit organizations, on the other hand, ultimately report to the communities they serve. To that end, nonprofit board members’ responsibilities differ greatly from for-profit boards.
According to Northeastern University, nonprofit board members have eight basic responsibilities. These are:
- Define the organization’s mission and vision
- Manage personnel at the C-Suite level, including performance reviews
- Collaborate with team members to create short- and long-term plans and measure results
- Verify the effectiveness of the organization’s programs and initiatives
- Help secure and manage funds
- Improve board performance
- Ensure compliance with legal and ethical standards, as well as any relevant regulations
- Earn and encourage support from donors, community members, and stakeholders
On a day-to-day basis, nonprofit board members might follow changes in their field, review budgets, prepare meeting minutes, fundraise, and more, all of which should be in service of the responsibilities outlined above.
Board member responsibilities by role
To accomplish their many responsibilities, boards of directors also have many predefined roles. Board members will often elect fellow members into specified roles based on that member’s overall career, skills, and experiences.
The most common board member roles are:
- Board chair
- Vice-chair
- Corporate secretary
Boards may elect to include additional roles, but this will depend on the needs of their organization and the standards of their industry. These roles include but are not limited to:
- Treasurer
- General counsel
- Committee chairs
Below you will find a brief description of the above board member roles:
Board chair
Board chairs interact with nearly everyone in the organization, so it’s essential that the board selects a person to fill the role who can meet the strong expectations that come with it. The primary role of the board chair is to lead and guide the rest of the board. To this end, the board chair is typically responsible for the following:
- Act as a direct liaison between the board and management
- Serve as an ex-officio member of all committee meetings
- Develop solid relationships with the board directors, the CEO, managers, the corporate secretary and committees to lead effectively.
- Helping the corporate secretary to write the agenda, which is used as a tool for facilitating board meetings
- Guides the rest of the board by focusing on the organization's vision, mission and strategic direction
- Sets a tone for board meetings that promotes respect, collaboration and decision-making
- Oversees board committees
- Aligns committee work with the mission and vision of the organization
- Becomes a mentor and advisor to the CEO to translate the board’s strategic plan into action
Vice-chair
Like the board chair, the vice chair is appointed after a vote from the full board. In addition to their own responsibilities, the vice chair is the board chair’s successor. They will step in after the board chair’s first term, or whenever circumstances require them to take over. The vice chair must always be ready, which means they have to support the board chair and stay abreast of all board activities.
Vice chairs commonly do the following:
- Lead the Nominating and Governance Committee
- Spearhead special projects identified by the board chair
- Stay on top of all board activities, both present and upcoming
- Work closely with the board chair, as needed
Corporate secretary
The corporate secretary is one of the busiest and most well-known people in an organization. Corporation laws in every state require corporations to appoint a corporate secretary. When discussing the role of the corporate secretary, it’s prudent to mention that the role is evolving along with recent corporate developments. Corporate secretaries are now considered senior positions with major governance responsibilities, including the following:
- Setting the agenda and ensuring all board members and other board-meeting guests have the proper reports and other materials in time to review them for the board meeting
- Recording minutes during board meetings and preparing a final copy of the minutes for the board
- Maintaining good governance
Treasurer
The board treasurer oversees the organization’s finances. They might also chair the finance and budget committee and work closely with the CFO to ensure the board’s budget is implemented across the organization. Common roles and responsibilities for the board treasurer are:
- Preparing the budget
- Overseeing the finance committee
- Reporting to the board and shareholders on the organization’s financial performance
General counsel
The role of the general counsel must be filled by a lawyer. The board views the general counsel's position as a partner in the business process that helps them ensure their strategic plans fall within the auspices of the law. General counsels are also responsible for:
- Proactively identifying and mitigating potential legal issues
- Participating in early planning and decision-making with the board and CEO before plans get too far underway
- Holding board members accountable about issues that threaten the company's legal compliance
- Staying on top of all board activities and any developments that could create a legal conflict
Committee chairs
Board member responsibilities can vary depending on the committee they chair. For example, finance committee members have very different duties than those on the nominating committee. Generally speaking, however, committee chairs serve the board in the following ways:
- Develops a deep understanding of their committee’s focus intiative
- Oversees all committee activities
- Sets the agenda for committee meetings
- Reports back to the board on the committee’s progress
Roles and responsibilities of the C-Suite
The top-level executives have come to be known as the C-suite. This often includes the chief executive officer (CEO), chief information officer (CIO), chief security officer (CSO), chief operations officer (COO), chief risk offer (CRO) and chief financial officer (CFO).
Each person in the C-suite is the final authority in their area of management. C-suite executives are responsible for working closely with the board and for overseeing the senior managers, managers and other employees to make sure that they are fulfilling the objectives and strategic plans of the board without creating undue risks.
Most C-suite executives seek to develop a good chemistry with the board of directors. It's vital that they communicate regularly and transparently with the board. They are wise to seek input from the board and accept guidance and feedback on strategy. Having a good relationship with the board ensures that C-suite executives will stand a good chance of gaining the support of the board for their ideas. The board chair plays an instrumental role in keeping the lines of communication between C-suite executives and board members open and collaborative.
While C-suite-level executives are continually challenged by the diversity and independence of the board, they do well to welcome probing questions as opportunities for responsible planning. C-suite executives need to recognize the experience of board members and to remain open-minded and flexible in their responses to the board.
It's wise for C-suite executives to acknowledge that one of the board's responsibilities is succession planning. C-suite executives sometimes encourage senior managers to make presentations to the board to give the board opportunities to continue developing an internal management talent pipeline.
Roles and responsibilities of senior management
While C-suite executives have the final authority and responsibility, senior managers also play an important role in implementing the board's strategic plans. Senior managers plan and direct the work of groups and individuals. Senior management oversees such departments as accounting, marketing, engineering, customer support and operations.
Senior managers need to be able to take corrective action when necessary, either directly or through lower-level managers. They must approve hiring and firing of individuals and adhere to their department's budgeting constraints. Senior managers must keep their goals and priorities clear. At times, their role requires them to collaborate with other departments to fully execute their duties.
A final summary on board member responsibilities
No one role in a corporation is more important than another. Every group and department must work together for the good of the company. In addition to each board member fulfilling their own roles and responsibilities, there are several responsibilities that everyone shares, not least honesty and integrity.
Acting in a responsible manner means building close relationships that have boundaries for independence and professionalism. Each board member is accountable for their actions and should be aware of the actions of their counterparts. Overall, when each person acts in the best interests of the organization, board member responsibilities are fulfilled, and the corporation can best serve stakeholders’ interests.
Discover how corporate boards stay a step ahead in our article 7 Board Management Best Practices for 2022.
