The responsibilities of directors on boards have three formal obligations that all members must abide by: Duty of Care -Board members have a legal responsibility to act in the best interest of the organization and to make decisions keeping the company’s goals in mind. Duty of Loyalty All members must put their personal and professional interests aside when making decisions for the company. Duty of Obeyance – Every member is legally obliged to ensure that the organization abides by all applicable laws and abides by standards for good governance.
Directors of boards have more complicated duties than these three. The duties of directors vary based on the needs of each company. For example when your company is a publicly traded corporation is likely that one of the responsibilities of your board includes overseeing the CEO’s performance and making sure the financial statements are accurate. If you’re a newcomer within your business your board could be focused more on setting goals for strategic objectives and determining the direction of your business.
Another aspect of the responsibilities of the board is ensuring the proper balance of risk management. For instance, your board may need to intervene to thwart any crises that threaten the reputation of your business even if it’s not their legal or ethical duty. Boards should also ensure their members are aware of the dangers associated with being on their board and are prepared to manage the risks in a responsible manner.
Ultimately, all board members have an important and unique role to play in helping your company succeed. For this reason, it’s essential to have a clear understanding of the duties assigned to your board and how they are connected to your company’s strategic goals. Fortunately, tools such as Aprio’s board portal software can help you simplify your tasks and organize meetings efficiently.