The Importance of Board Composition

In recent times, investors have centered on the importance of board directors. Boards are comprised of individuals who bring their own unique expertise, knowledge and networks to the table. But the primary goal of every effective board is to work together in order to evaluate the performance of the organization and support the CEO.

To achieve that goal it is essential that a board be designed to be efficient and well-equipped to fulfill its function. Often, this is achieved by building a robust team that can uncover the truth, and act as an essential sounding board.

In general, it is suggested that boards have an equal number of new board members as well as experienced directors to offer an array of perspectives and expertise. To achieve this, it is essential to establish an objective framework that lets the nominating committees as well as the board to determine the skills, qualities and talents required to be a perfect director candidate.

A popular tool is a matrix of the board that contains individual traits that can assist in the selection of potential board members. However it is important to keep in mind that just because a person has certain characteristics does not suggest that they are the best suitable candidate for the position.

A particular kind of obstruction to changes in the composition of boards can arise in relatively new organizations that are dominated by one or more founding fathers who believe that they are in control and are unwilling to take on the risk of change. This can result in a «founders syndrome» where nominating committees do not recognize the need for fresh talent and a refresh of board composition.

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