Interest in board work is increasing, but what does the role of a board member entail? We clarify when it is appropriate to bring in an external board, the importance of a properly composed group, as well as the overall purpose and main tasks of the board.
Having a professional board is an important part of a company’s progress. When a company has more than 10 employees or has a turnover of 10 million SEK, it is recommended to bring in external board members, preferably an external chairman. This creates conditions for the company to grow in a sustainable way in the long term. It is both about having order and structure in the company when there are increased demands from, for example, authorities and potential financiers, as well as having expertise and experience beyond what the owners possess.
The importance of different perspectives
A professional board should consist of people with different backgrounds and competencies to best ensure that the company is prepared for what is happening around the corner. Having different perspectives and experiences contributes to the right questions being raised in time and can therefore be handled and planned for before it is too late.
Desired competencies in the boardroom
- Understanding of target audience, business value, and inspiring a strengthening corporate culture
- Ability to see the big picture
- Sustainability linked to the business
- Digitization
- Change management
- Financing
- Environmental scanning and risk management
- Formality, order, and structure
- Business development and scaling up
- Human perspective in acquisitions, mergers, growth or other changes
A board is responsible for leading and making decisions for the company on an overall level, which, in addition to the aforementioned skillset, means that all members need to have good communication and collaboration skills. Everyone must have a clear understanding of the company’s goals, strategies, and values in order to act in the company’s best interest in every decision.
As a board, it is important to continuously evaluate their own work, preferably with the help of an independent party. In addition to this, by having a clear structure for reporting and follow-up, one can ensure that the company is moving towards its goals and that decisions are made in a well-founded manner.
The main tasks of the board (in brief):
- Decision-making and follow-up responsibility
- Ensuring that the company develops in the right direction
- Ongoing review of financial management and accounting
- Compliance with laws, and ensuring that taxes are paid on time
- Evaluating the CEO’s work
Working on a board is a challenging task that demands a lot of time and commitment, but with the right composition and willingness to drive the company forward, it can make a big difference for many people.
Article written by Katarina Åhlin, CFR Global Executive Search Sweden
Photo source: Freepik