Meghan Day

Principal Solution Designer

Board of directors: Definition, roles & responsibilities

In PwC’s 2024 Annual Corporate Directors Survey, 35% and 34% of respondents said they intend to add financial and industry skills in the next year, compared to just 10% eyeing candidates with generative AI backgrounds. This suggests that traditional skills will continue to prevail in the boardroom, a nod to what many see as the core roles and responsibilities of boards of directors.

The board of directors exists to oversee corporate objectives and operations and act in the best interest of its shareholders or stakeholders. From the bottom to the top, every role within a corporate board comes with distinct definitions, responsibilities and duties. Each role of a board of directors was designed to manage a specific purpose within 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 outlined within the written job description for the role.

Clear communication and expectations for transparency are prime factors in effective collaboration within every role of a corporation, often made easier with board management software. In a perfect corporate world, there shouldn’t be any gaps or overlaps. However, achieving a seamless balance of executive and board roles and responsibilities is easier said than done. Here, we will explain the most essential corporate roles, including:

• What the board of directors is
• Types of boards
• The purpose and benefits of a board of directors
• Board of directors structure and composition
• A skills matrix for board succession planning
• What the primary roles and responsibilities of the board of directors are
• Key board of directors roles, from the board chair to the secretary
• Board of directors examples
• How senior management supports board effectiveness
• Challenges modern boards face
• The role of the board in the new AI era
• Resources for building a better board

What is the board of directors?

The board of directors is a group of individuals elected to represent shareholders and oversee an organization’s activities and strategic direction. They:

• Set strategic goals
• Ensure financial accountability
• Hire and evaluate the CEO
• Safeguard the organization’s missions and values

Whether serving a nonprofit or a private or public company, the board is vital to governance, leadership and long-term success. The more effective the board, the stronger the organization will be.

Types of boards

There are different board types depending on the organization’s structure, goals and stage of development. Here are the five most common types of boards:

1. Governing boards: This is the most common type of board and assumes legal and financial responsibility for the organization. They set strategic direction, ensure financial sustainability and hold executive leadership accountable. Most corporate and nonprofit boards fall into this category.
2. Advisory board: Advisory boards offer guidance, expertise and support but have no formal governance authority. Startups, nonprofits and growing businesses often form advisory boards to gain strategic insight without the legal responsibilities of forming a governing board.
3. Working board: Working boards are hands-on, and they are common in early-stage nonprofits and startups. Due to limited staff capacity, members both govern and help execute the organization’s day-to-day work.
4. Policy board: Found largely in educational institutions and public agencies, policy boards focus on setting broad policies and procedures. They often leave implementation to administrators or staff and are less involved in operational decision-making.
5. Collective or consensus board: Typically used in cooperative or grassroots organizations, these boards operate without a formal hierarchy. Decisions are made collectively, and power is shared equally among members.

Dig deeper into board governance models >

What is the purpose of a board of directors?

The primary purpose of a board is strategic oversight and corporate governance. They don’t execute any processes or programs directly but guide high-level decisions that shape the organization’s future. In most cases, the organization’s financial health, accountability, risk management, compliance and more all lead back to the board.

In nonprofits, boards also play a key role in fundraising and community representation, while corporate boards focus more on shareholder interests and driving long-term value.

Board of directors structure and composition

The most crucial governance structure for any board is creating an environment of trust and respect. The means to that end often look alike: building high-functioning teams, putting each director through a set process of recruiting, orientation and evaluation.

Assembling an effective board requires a keen eye for its composition. All boards need a demographically diverse mix of members with complementary skill sets and knowledge bases. As they anticipate turnover, they should always consider how recruits would add to that mix. If the only attorney on the board is leaving, finding another attorney is better than adding a fifth or sixth accountant.

Board size, independence, and more also influence its structure and performance.

Size of the board

Corporate boards should be large enough to bring diverse perspectives and competencies into the boardroom to encourage robust debates and discussions. The generally accepted size for corporate boards is between eight and 12 board directors. Boards must be large enough to form sufficient committees to do the work.

In addition, board committees need to have enough members to do their work. Boards may be tempted to increase the size of their boards because they desire gender diversity and to fill all the needs for specialist issues, such as cybersecurity. However, boards must find the balance between adequate expertise and not expanding the board unnecessarily.

Boards that are too large lose effectiveness. Regardless of the board’s size, all board directors are expected to contribute to the success of the board.

Board independence

Best practices for board composition expect that the minimum requirement for boards is that the majority of directors be non-executive, independent directors. In addition to being independent of board business, 'independence' also refers to independent thinking, so the board is not likely to cave to groupthink.

It’s best if board directors don’t have any personal or commercial conflicts of interest. If any conflicts arise, board directors should declare them and refrain from voting on related matters.

Independent board members shouldn’t be recent former members of the company. There should be enough time between employment and directorship for the board director to be objective. To be truly independent, board directors shouldn’t have any financial relationships with the company or its counterparts. Independent directors shouldn’t have interlocking directorships. Also, it’s vital that board members not be selected to fill a void in executive weakness.

Board terms

Best practices for board terms require a dynamic approach. A director’s longevity on a board isn’t necessarily a sign of director success. Having fixed, staggered terms encourages board refreshment and renewal, yielding a revolving set of fresh and innovative ideas and thought processes.

Term limits for board directors offer greater accountability and transparency. Shareholders have also expressed their desire for companies to set board terms.

Board diversity

The search for board director candidates who offer diversity is another area that has forced boards to widen their pool of candidates. Diversity on corporate boards is a healthy sign because it ultimately leads to better overall decision-making. It’s also vital that board directors are diverse in their thinking patterns because it brings various experiences, perspectives, interests, and thought patterns.

In some areas, politics and regulations are becoming players in demanding greater board diversity. Boards should also look for diversity within their board chairs and CEOs.

Board commitments

Board directors serving on multiple boards is another board composition issue where trends are changing. In past years, no one considered how many boards a director served on. With new demands and pressures, best practices suggest that board directors should serve on no more than five boards.

Certain times of the year get hectic for board directors’ schedules, such as around the time of the annual general meetings. In the interests of time, it may not be possible for directors to serve on more than three or four boards, especially if they have to fly across various continents. Beyond these reasons, if even one company were to go into some sort of crisis, a board director would have to give that board priority with his attention. Board directors must be available for at least 20-30 days a year and be committed to attending six to 10 board meetings throughout the year.

Skills matrix for the board of directors

A skills matrix is a strategic tool used to assess and align the expertise, experience and diversity of a board of directors with the organization’s goals. It helps identify gaps, guide recruitment and ensure the board has the capabilities needed to govern effectively.

Boards tailor their matrix to their unique needs, but typical categories include governance and leadership, financial expertise, legal and compliance and more. Most matrices are laid out to visualize the skills of each board member. Here’s an example you can customize to include the areas of expertise you seek:

Each board member is assessed across the matrix to show which competencies are well-covered and which are underrepresented. This fuels proactive succession planning and equips the nominating and governance committee with the insights to recruit effectively once a board vacancy arises.

Master succession planning with our 21-step checklist >

Rules for the board of directors

The board of directors operates under formal and informal rules that uphold accountability, transparency and effective governance. These rules help guide board conduct, decision-making and responsibilities:

Fiduciary duties

Board members must act in the organization’s and its shareholders’ best interest. In doing so, they’re bound by three core legal responsibilities:

• Duty of care: Make informed decisions and actively participate in governance.
• Duty of loyalty: Put the organization’s interest above personal or professional gain.
• Duty of obedience: Keep the organization compliant with laws and aligned with its mission and bylaws.

Bylaws and governance policies

Beyond its fiduciary duty, there are rules for board members covering their day-to-day duties. These rules depend on the organization’s bylaws, but they will typically outline:

• How meetings are conducted
• How members are elected and removed
• Terms and term limits
• Voting procedures
• Officer roles and responsibilities

Boards may also be subject to additional policies for conflicts of interest, board attendance and ethics.

Meeting requirements

Board members must also meet specific meeting expectations, including:

• Meeting at regular intervals, usually quarterly or monthly
• Providing notice and agendas in advance
• Maintaining official minutes documenting decisions
• Establish quorum

Confidentiality and conflict of interest

One of the abiding rules for board members is to avoid conflicts that interfere with their fiduciary duty. Conflict of interest and privacy policies vary, but boards are typically expected to:

• Keep board discussions confidential
• Disclose potential conflicts of interest
• Recuse themselves from decisions where a conflict exists

What are the roles and responsibilities of the board of directors?

Today’s boards of directors are expected to be strategic and effective in driving value. The main role of a board of directors in corporate governance 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. Their roles and responsibilities also include:

• Keeping the organization financially secure and sustainable
• Managing enterprise-wide risk
• Driving effective board management
• Overseeing environmental, social and governance (ESG) issues
• Building relationships with shareholders
• Upholding their fiduciary duties
• Implementing and maintaining good corporate governance

These mission-critical responsibilities mean that the board of directors is much more than iconic figureheads. When choosing board members to fill vacant seats, boards typically look for specific qualities. Board members expect their fellow board directors to be willing to ask tough and probing questions to vet all sides of an issue.

When corporations hit bumps in the road, all fingers typically point back to the board of directors. 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.

Board chair roles and responsibilities

Board chairs interact with nearly everyone in the organization, so the board must select a person to fill the role who can meet the strong expectations that come with it. The board chair’s responsibilities are to:

• Lead and guide the rest of the board
• Serve as the direct liaison between the board and management
• Stay in the loop on all board activities
• Act as an ex-officio member of all committee meetings
• Develop solid relationships with the board directors, the CEO, managers, the corporate secretary and committees in order to lead effectively
• Help the corporate secretary write the agenda, which is used as a tool for facilitating board meetings effectively
• Guide the rest of the board during meetings by focusing on the organization’s vision, mission and strategic direction
• Set a tone for meetings that sets the stage for respect, collaboration and decision-making
• Play an influential role on the executive committee and full board to drive the agenda and identify priorities. This responsibility of board chairs has increased in prominence as corporations find the most efficient way to govern: to form an executive committee that acts as a steering committee to prioritize issues for the full board.

Beyond the day-to-day, board chairs are also responsible for relationship building. Most people who serve as board chairs are keenly aware that they need to develop a trusted relationship with the CEO and other executives.

In a mutually beneficial relationship, the board chair acts as a mentor and advisor to the CEO. Working collaboratively, the board chair helps the CEO to translate the board’s strategic plans into action.

The board chair needs to be willing to ask the CEO the hard, probing questions that come from the board and work in tandem with the CEO during times of crisis. Both parties work best together when the board chair maintains an open-door policy to keep the lines of communication open. Board chairs must also be mindful that their roles are vastly different from the CEO’s responsibilities. The board chair mustn’t usurp the CEO’s authority or overstep the CEO’s role.

The board chair also needs to develop a strong relationship with the board directors and facilitate board meetings so that the board can do its own work. This duty includes encouraging all board members to be actively engaged. The board chair also typically participates in annual board member orientation, onboarding and development.

Roles and responsibilities of the corporate secretary

One of the busiest and most well-known people in an organization is the corporate secretary. 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 it is evolving along with recent corporate developments. Corporate secretaries are now considered senior positions with major governance and board management responsibilities.

The duties and responsibilities of today’s corporate secretaries often call for the role to be filled by a senior board member with certain areas of expertise. Corporate secretaries’ responsibilities include:

• Serving as the legal representatives of the corporation: Many corporations prefer to choose candidates for corporate secretaries with accounting or law expertise. In fact, some corporations require that the role be filled by a lawyer. Some corporate secretaries perform dual duty as general counsel or in another legal role. Keeping in mind the needs of the organization, most corporations expect the corporate secretary to have a master’s degree in administration or commerce, at a minimum. Some boards also expect the corporate secretary to belong to a body of professional accountants or an association of corporate chartered secretaries.
• Setting the agenda: As described by corporate bylaws, one of the corporate secretary's most prominent board duties is creating the agenda and ensuring that all board members and other board meeting guests have the proper reports and other materials in time to review them for the board meeting. The corporate secretary also records minutes during board meetings and prepares a final copy of the minutes for the board to approve at the next board meeting.
• Maintaining good governance: This role and responsibility of the board of directors is a large part of the corporate secretary's role, which includes helping board members with an initial orientation and ongoing board development. The secretary needs to know which reports need to be filed with regulatory authorities and when they are due.
• Holding signing authority: The corporate secretary signs legal documents and bears custody of the corporate seal. For these reasons, it's also important for the corporate secretary to know and understand the history of past laws, the existence of current laws and the potential impact of future laws. This position also requires the corporate secretary to participate in regular legal discussions with the CEO, board, chair, general counsel and other corporate attorneys about legal matters.

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Ensure effective governance

Discover Diligent's checklist for corporate secretary's to improve board effectiveness and mitigate all challenges ahead

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Ensure effective governance

Discover Diligent's checklist for corporate secretary's to improve board effectiveness and mitigate all challenges ahead

Discover more

Roles and responsibilities of the general counsel

A lawyer must fill the role of the general counsel. The board views the general counsel position as responsible for:

• Partnering in the business process to help the board ensure their strategic plans fall within the auspices of the law.
• Acting with unquestionable integrity in upholding the law
• Knowing and understanding the legal environment within the industry.
• Identifying and pre-empting any potential reputational issues. The most effective way to do this is for the general counsel to participate in early planning and decision-making with the board and CEO before plans get too far underway.
• Confronting board directors when necessary to hold them accountable for issues that threaten the company’s legal compliance.
• Attending regular and routine board and committee meetings to keep in the loop of current developments. Also, when attorneys attend board meetings regularly, it prevents the rumor mill from perceiving a random meeting as an alarm bell.
• Maintaining a good working relationship with the audit committee and its chair.

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 officer (CRO) and chief financial officer (CFO).

Each person in the C-suite is responsible for:

• Serving as the final authority in their area of management.
• Working closely with the board
• 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.
• Developing a strong working relationship with the board
• Communicating regularly and transparently with the board
• Seeking input from the board and accepting 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 board's support for their many roles and responsibilities. The board chair plays an instrumental role in keeping the lines of communication between C-suite executives and board members open and collaborative.

While the board’s diversity and independence continually challenge C-suite-level executives, they do well to welcome probing questions as opportunities for responsible planning. C-suite executives need to recognize the experience of board members and 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 essential role in implementing the board’s strategic plans. Senior managers:

• Plan and direct the work of groups and individuals.
• Oversees such departments as accounting, marketing, engineering, customer support and operations.
• Take corrective action when necessary, either directly or through lower-level managers.
• Approve hiring and firing of individuals and adhere to their department’s budgeting constraints.
• Keep their goals and priorities clear
• Collaborate with other departments at times to execute their duties.

Board of directors examples

One high-profile example of a board’s oversight and strategic decision-making is The Walt Disney Company. In 2022, under then-CEO Bob Chapek, Disney’s board acted decisively, facing declining stock prices, creative misfires, and investor concerns.

They reviewed the company’s strategic position, leadership challenges and opportunities and then voted to replace Chapek by bringing back Bob Iger; he had served as CEO for 15 years and was widely credited with Disney’s successful acquisitions of Pixar, Marvel, Lucasfilm and 21st Century Fox.

This move demonstrated the core responsibilities of the board of directors:

• Overseeing leadership and performance
• Holding themselves accountable to shareholders and stakeholders
• Protecting the company’s long-term vision and stability

What does the board of directors need to do before, during and after board meetings?

Board meetings are integral to the board’s overall effectiveness. The more collaborative the board is before meetings, the more engaged they can be during the meeting — and the better they can navigate risks and opportunities after the meeting ends.

But effective meetings don’t just happen. Here’s what each board member is expected to do at each stage to support them:

Before the meeting

• Review the agenda and materials: Log on to the board portal to review the board packet, including the agenda, previous meeting’s minutes, financial reports and any items requiring a vote.
• Clarify questions in advance: Reach out to the board chair using Boards Messaging, or comment on any documents using secure coollaboration tools.
• Prepare to participate: Reflect on the strategic issues on the agenda and consider what input or insights you can offer. Review any dashboards, reports or documents that could help you form an opinion.
• Understand the decisions ahead: Know which decisions will be subject to a vote and be ready to act in the best interest of the organization.
• Check action items: Use the board portal to access previous meeting minutes and ensure you’ve addressed any follow-ups.

During the meeting

• Be fully present: Arrive on time, stay focused and minimize distractions. Active engagement is key to good governance and leveraging your unique expertise for the good of the board and the organization.
• Contribute thoughtfully: Ask questions, offer expertise and listen actively to others. If meeting virtually, use “raise your hand” features and Boards Messaging to share thoughts respectfully without interrupting other members.
• Observe protocols: Follow the agenda, respect time limits, and adhere to any parliamentary procedures the board uses.
• Vote: Review, discuss and weigh in on key decisions. Add comments when necessary to explain your vote or ask an essential question.

After the meeting

• Review meeting minutes: AI-powered minutes software can quickly translate meeting notes into formal minutes. Read the minutes once you’ve received the meeting minutes email to ensure they are an accurate depiction of the meeting.
• Follow up on action items: If you’ve committed to or assigned a task, follow through promptly.
• Stay engaged between the meetings: Tap into your board portal to stay abreast of your organization’s work and remain responsive to board communications. Attend meetings for any committees you’re on.
• Offer feedback: If appropriate, share feedback with board leadership on what worked well at the meeting and what could improve future meetings.

Visualize the exact steps to take before, during and after board meetings >

Challenges facing the board of directors in 2025

The world is increasingly complex and interconnected, and the business landscape continues to evolve rapidly. But, according to Diligent’s What Directors Think survey, board members feel more in control and optimistic. Of board members surveyed, 76% say pursuing growth is their top priority, and 78% say growth strategies would be the most pressing item to include on the 2025 board agenda.

Boards are also well aware of the pitfalls they could encounter on the growth path. Losing mission-critical individuals like the CEO and major cybersecurity incidents rank highly among the challenges that board members think could derail their plans, as could:

1. Economic uncertainty: Volatility, inflationary pressure, and potential supply chain disruptions in the wake of geopolitical instability will challenge boards to think strategically about performance. Seventy-nine percent of directors view geopolitical events as threatening their business strategy, even though only 10% prioritize those risks for 2025. Boards will be challenged this year to balance long-term growth with decisions that could bolster short-term resilience.
2. AI and digital transformation: AI, automation and data security have quickly become core to governance. By the end of 2025, boards will be expected to understand emerging technologies and investments in innovations. Board members already feel the pressure. This year, 44% of board members say they will incorporate AI and generative AI into at least one area of their business; 42% also believe AI could optimize their operations and costs, enhance workforce productivity and yield better data and reporting. Despite this, as many as 32% of board directors say they lack the AI governance expertise among their leadership team — a challenge boards must overcome to reap the technology’s full rewards.
3. Shifting social pressures: Pre-2025, many organizations were full steam ahead on ESG initiatives and diversity, equity and inclusion (DEI) programs. These tides shifted after the Trump administration took office, and many boards are grappling with how to express their points of view on larger societal issues. A staggering 88% of board members say there is a greater risk of losing customers by taking a stance on an issue, a 14% increase from 2017. Given this shift, it’s not surprising that 61% of directors say the board should be consulted before any public statements are made. This will then challenge the board to formulate stances and communicate them effectively.
4. Strategy: For the first time in years, cybersecurity wasn’t the board’s top challenge; Strategy is, with 42% seeing it as the most prominent hurdle board directors now face. Given the above forces, this isn’t a shock. But what’s particularly challenging is that only 30% of directors rate their board’s ability to understand the company’s long-term strategy as excellent. Similarly, directors rated their effectiveness on succession planning relatively low, suggesting that directors may also struggle to fill vacancies strategically. Boards will likely need greater support and better platforms to boost effectiveness and provide insights to drive sound strategies.

AI and the board of directors

AI is certainly a challenge boards will face in 2025, but it’s also a tremendous opportunity. As stewards of long-term strategy and risk, boards of directors must understand AI’s implications and master its rewards to give their organization a competitive edge.

How does AI impact the board of directors?

Early AI models were efficiency tools and writing assistants. Over time, AI has slowly entered — and elevated — the boardroom. AI impacts boards in several key ways:

• Strategic oversight: Boards must assess how AI aligns with the organization’s mission, competitive advantage and future readiness. In many ways, though, AI is its own solution. Purpose-built AI can actually generate the insights boards need to achieve this oversight and make informed decisions.
• Governance and risk: Directors are expected to understand AI’s risks — bias, data privacy, cybersecurity and legal liability — and ensure proper governance structures are in place. Many boards adapt their risk management frameworks to follow suit and even adopt AI-powered enterprise risk management (ERM) platforms.
• Ethical responsibility: AI is shaping decisions that affect people’s lives and livelihoods, so boards must oversee the ethical use of algorithms and promote transparency and accountability.
• Talent and workforce planning: AI is transforming jobs. Boards must guide leadership on reskilling, workforce impacts and fair labor practices. This includes automating time and resource-intensive manual processes and reallocating teams to perform the strategic tasks modern boards need.

On a recent episode of The Corporate Director Podcast, Diligent CEO & President, Brian Stafford highlighted how AI can support executives with having the right information, at the right time and added confidence that nothing slips through the cracks.

Stafford said, “I am one of those people who struggles sleeping at night because I’m always worried about something, some kind of risk out there, something I missed, something I didn’t get the right information or conclusion from. I think of AI as being [...] helpful in making sure I don’t miss anything.”

How can the board navigate risks in the new AI era?

Boards should approach AI risk with the same rigor as financial or operational risk. How exactly that looks depends on the organization’s size, resources and risk management maturity.

Navigating the AI era as an enterprise

Enterprise-level organizations need a single source of truth for all risk data, including AI risks. The catch is that AI-powered risk tools are better equipped to centralize risk data, monitor compliance, streamline time-consuming processes, and clarify risk reporting.

When boards can run an ERM program from a single platform and get a holistic view of risk, ERM becomes a strategic advantage. This is key in the new AI era, when risks will likely evolve faster than ever, and new risks will lie around every corner.

Navigating the AI era as a small-to-medium-sized business

Smaller organizations dependent on risk management spreadsheets should focus on the essentials first without leaving AI out of the equation entirely. Focusing on AI risk essentials can get your program up and running in under seven days. Within a week, you’ll have access to AI-powered benchmarking data to identify the most relevant risks for your industry. With insights in hand, you can quickly identify and mitigate the most pressing risks.

Starting your ERM maturity journey early will also make transitioning to more comprehensive tools easier as your organization and expertise grow.

How can the board of directors leverage AI?

Boards themselves can benefit from AI as a tool to enhance governance:

• Better decision-making: AI tools can analyze large datasets to provide insights into market trends, customer behavior and internal performance.
• Board analytics: Use AI to track board engagement, identify board composition gaps and streamline recruitment based on skills matrices.
• Scenario planning: AI can simulate potential outcomes of strategic decisions, helping boards weigh risks and rewards.
• Enhanced communication: AI can help synthesize long reports or draft clear summaries of meeting books and other documents, highlighting the most salient details for the board so they can stay engaged and prepared.
• Formalize notes: AI-powered tools can translate rough notes from committee meetings or critical decisions into a formal record with just one click. AI tools will break notes into sections based on contextual information for you to review and finalize, giving you a shortcut to high-quality minutes.

Drive better performance by perfecting the roles and responsibilities of the board of directors

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, everyone shares several responsibilities, not least honesty and integrity.

Importantly, when everyone acts in the organization’s best interests, the corporation best serves the public interest. While tools like Diligent Boards, part of the Diligent One Platform, can make it easier to fulfill the board’s many responsibilities, board effectiveness will remain elusive if you lack the right board structure.

High-performing boards result from clear roles and responsibilities for the board of directors that empower each member to act strategically, efficiently and in line with good governance. Our guide for building a better board will explain:

• Critical steps for maximizing board effectiveness
• The power of key strategies like establishing inclusive norms and utilizing cutting-edge technology
• Tips for fostering collaboration, trust and innovation
• Practices your board can use to navigate challenges and capitalize on opportunities

Download our guide now to start building a high-performing board.

FAQ

What does a board of directors do?

A board of directors oversees the strategic direction and overall performance of an organization. Its key responsibilities include hiring and evaluating the CEO, approving budgets, setting policy, ensuring legal and ethical compliance and protecting shareholder or stakeholder interests. The board serves as a fiduciary, ensuring the organization stays aligned with its mission and financial goals.

What is the role of the board of directors in corporate governance?

In corporate governance, the board of directors ensures accountability, transparency and ethical conduct. It establishes governance frameworks, monitors executive performance, manages risk and ensures that decisions are made in the best interests of shareholders and stakeholders. The board acts as a critical check and balance on executive management.

What are the functions of a board of directors beyond general strategic oversight?

Beyond strategic oversight, a board of directors may:

• Approve mergers, acquisitions or significant capital expenditures
• Oversee risk management frameworks
• Ensure compliance with regulations and ethical standards
• Set executive compensation
• Guide during crises or leadership transitions
• Support fundraising and stakeholder engagement in nonprofits

What is the definition of a board member?

Board member definition: An individual elected or appointed to serve on a governing body guiding an organization’s mission, strategy and performance.

Board members have fiduciary duties, which include the duty of care, loyalty, and obedience, and are expected to contribute expertise, make informed decisions, and uphold the organization’s best interests.

What does the board of directors in a corporation do?

In a corporation, the board of directors governs the company’s affairs by:

• Appointing and overseeing executive leadership (especially the CEO)
• Approving strategic plans and significant business decisions
• Monitoring financial performance and risk
• Ensuring compliance with laws and ethical standards
• Representing shareholder interests

How to get on the board of directors?

To get on a board of directors:

• Build relevant experience: Gain leadership, industry, or governance experience.
• Network strategically: Connect with existing board members, executives, and search firms.
• Develop a board-ready profile: Highlight skills in finance, strategy, risk or ESG.
• Join advisory or nonprofit boards: These can be stepping stones to corporate boards.
• Apply or be nominated: Through formal board searches, referrals or shareholder votes.

Get more in-depth guidance for joining a corporate board.

Who should not serve on a board of directors?

Board service requires responsibility, accountability and active engagement. Individuals should not serve on a board if they:

• Have a conflict of interest with the organization
• Lack the time or commitment required for active participation
• Do not understand or support the organization’s mission
• Have a history of unethical behavior or legal violations
• Are “overboarded” (i.e., serving on too many boards to be effective)

In which situation are ethical considerations the responsibility of a board of directors?

The board sets the tone at the top and ensures that the organization’s values align with its actions. Ethical considerations are the board’s responsibility in situations involving:

• Executive compensation and behavior
• Conflicts of interest
• Corporate social responsibility and ESG decisions
• Data privacy and AI usage
• Workplace culture, harassment, or discrimination issues
• Financial integrity and public trust

What is the meaning of overboarding?

Overboarding refers to a situation where a person serves on too many boards, limiting their ability to effectively fulfill their responsibilities. Governance best practices often recommend limits — for example, no more than three public company boards for a sitting CEO. Overboarding can reduce meeting attendance, engagement and overall effectiveness.

What are the benefits of being a board member?

The board of directors sits at the top of the organizations they serve. This comes with an elevated profile and respect that brings numerous personal, professional and community gains. Some key benefits of being a board member are:

• Influencing the organization’s strategic direction
• Enhancing your leadership skills by providing experience in governance, financial oversight and decision-making at a high level
• Expanding your professional network, connecting you with leaders, experts and community influencers
• Strengthening your resume by demonstrating your commitment, responsibility and ability to work collaboratively on complex challenges
• Deepening your personal fulfillment by contributing to positive change within your organization or industry.

How to remove an entire board of directors?

Removing an entire board of directors is rare and typically requires:

• Shareholder action: Through a special vote or meeting, if the bylaws allow.
• Legal action: If there is evidence of breach a of fiduciary duty or misconduct.
• Amending bylaws: With majority stakeholder approval, to change board structure or election rules.
• Merger or acquisition: Sometimes, a new owner may replace the board.

Learn more about the exact process to remove a board member.

What style of writing would you use to write a report to be distributed to a board of directors?

A report for a board of directors should use a formal, concise and executive-level writing style. It should focus on clarity, data-driven insights and strategic implications, and the tone should be professional and neutral. Avoid jargon, but use precise language. Key elements often include:

• Executive summary
• Bullet points or structured sections
• Data tables or charts
• Risk and impact analysis
• Clear recommendations

Dig deeper into board reporting tips and best practices.

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