The board of directors is the mind and heart of every organization. The board’s streamlined corporate governance and forward thinking dictate success, while poor decision-making often results in a fiasco.
Each member of the board has the power to improve the way directors collaborate. To make these improvements effectively, it is vital for the director to understand the board member roles and responsibilities basics.
Did you know?
- Male leaders still dominate executive leadership in Europe. Yet, there is a powerful trend towards better diversity. From 2020 to 2021, 38% of boards have improved their GDI by adding at least one female to the leadership team.
- A conflict of interest policy is one of the most crucial things for smooth and efficient collaboration between board members.
- Corporate boards have less staff turnover than non-profit boards, electing some members for up to 15 years. However, there are no legally prescribed term limits for either type of board.
Roles of a board member in a nonprofit vs. for-profit world
Whether the board of directors governs a financial institution, a public company, or a non-profit organization, it is responsible for the following:
- Strategic planning process
- Financial management
- Setting the organization’s goals
- Overseeing staff members
- Establishing policies
- Measuring performance and achievements
Although nonprofit and corporate board member responsibilities largely overlap, there is still a difference. In particular, boards that govern commercial corporations are accountable to all consumers of their services. Nonprofit organizations, in turn, are responsible to local communities.
Basic board of directors roles
Productive boards resemble well-oiled mechanisms with each member fulfilling his or her duties to the fullest. There are four essential roles of board directors:
Chairperson, or the board president, is the central figure among all other roles of board of directors. As the leading board member, the chairperson carries the most responsibility and has the highest level of expertise.
Qualities that make a best chairperson include passion towards the role, approachability, and objectivity. As for the duties, a board president is the one who:
- Presides most board meetings
- Oversees board and executive committee meetings
- Serves as the main contact for fellow board members in case of difficulties or conflicts
- Develops meeting agendas
- Directs committees by appointing members and assigning chairs
- Enures corporate goals and objectives are met
Vice-chair, or vice-president, is essentially the next in line to the chairperson. Vice-presidents possess similar qualities as the president and support the leader in their duties whenever needed. Vice-chair’s board member duties include:
- Obtaining skills and knowledge to be able to substitute or replace the chairperson
- Taking the lead when the president is unavailable
- Assisting the chairperson in the execution of his or her duties
- Serving on board committees
- Gathering information required for future corporate leadership
Secretary is the individual board member with the most administrative, yet crucial board member role. Every organization’s approach to corporate secretary responsibilities is different but his or her duties include:
- Distributing all necessary information before every meeting
- Taking the minutes of the meeting and sharing them to the members of the board afterwards
- Scheduling meetings and notifying each board member of such
Treasurer is the member heading the corporation’s financial matters. This is the most demanding of all roles of board of directors as the treasurer controls all monetary flows, including spending and investing.
While bookkeeping and accounting skills can be assets to the treasurer position, this board member should also be reliable and organized as his or her main duties are:
- Reconciling bank accounts and producing organization’s financial statements
- Overseeing the finance committee and the organization’s financial officer
- Monitoring the timely submission of tax documents and legal forms
- Assisting the CFO with preparing the annual budget
- Reviewing the annual audit and answering audit-related queries
Committee chair is appointed by the board of directors to scrutinize and weigh the organization’s initiatives. In particular, the duties of the committee chairs include the following:
- Planning committee meetings
- Setting agenda for committee meetings
- Reporting collected information to the full board
Director is a role performed by individual members of the board. Their area of responsibility is not only to fulfill fundamental legal duties and fiduciary duties, but they also deal with the following:
- Providing ethical and legal governance
- Governing the financial policies
- Advocating for the organization
- Fundraising
Board member duties and responsibilities
While board member expectations regarding their main duties may vary, typically responsibilities and duties of a board member include the following.
Board member duties
Three basic fiduciary responsibilities sum up board member legal requirements and ethical guidelines:
- Duty of care. Each board member’s dedication is measured through proactiveness and dynamic communication. Sincere commitment is what makes the execution of all duties and responsibilities effective.
Main takeaway: Board members show their duty of care by keeping up a pristine attendance record, following through with promises and duties, and communicating with other board members honestly. - Duty of loyalty. Fulfilling duties and responsibilities also means prioritizing the organization’s interests over individual ones. Loyal board members represent and realize the company’s mission.
Main takeaway: Not gaining profit to the prejudice of the corporation is an excellent indicator of board member loyalty. - Duty of obedience. The board has to follow the organization’s rules and local laws, even if these make it more challenging to reach the corporation’s goals. Disrespect towards governance regulation can quickly dissolve each member’s integrity and even affect the company’s reputation.
Main takeaway: The chairperson must make sure each director is aware of their duties and responsibilities, including the organizational rules and guidelines.
It is good practice for the chairman to regularly remind the board of directors of their legal and ethical duties. This way, everyone on the board is on the same page and doing their best to contribute to the overall purpose.
What are the responsibilities of a board member?
How do board duties and responsibilities apply in practice? Below are the top 11 responsibilities of the board members.
- Establish and fulfill the corporation’s mission and vision
Mission and vision statements summarize the board member duties and responsibilities by answering the “what” and “how” questions. The board has to determine what the goals of the organization are and how the organization will achieve these.
- Hire, support, and assess the chief executive
The current board members select the executive director to guide the company. It should also regularly assess the executive’s performance evaluation and re-hire, if necessary.
- Manage the corporate finances
Financial statements give the board an idea of the incoming and outgoing funds. Each member must know how to assess financial statements, assist the chief financial officer, and make informed decisions based on these statements.
- Create and implement developmental strategies
Another board’s responsibility is to create and execute long- and short-term strategies, which are built up from a SWOT (Strength, Weakness, Opportunities, and Threats) analysis.
- Monitor the resource supply
Adequate resources guarantee the fulfillment of the corporation’s mission, and it is the board’s task to ensure the resource flow meets the requirement. Transparency and accountability are key to efficient resource management.
- Recruit new board members
When boards act in the organizations’ best interests, they remain on the lookout for new people and services that can bring value. That’s why recruiting and appointing new board members is among the board officers’ responsibilities.
- Attend board and committee meetings
Regular board meetings help directors fulfill their organization’s board duties as they are able to communicate and strategize. The more organized and resourceful these meetings are, the better decisions are made for the corporation.
- Serve in committees
All board members have to be ready to be a part of committees or task forces. Additionally, they will need to assist the chairperson and orient other committee members on how to operate.
- Guarantee legal and ethical compliance
Every organization follows two sets of rules: the external law and the internal policies. Ensuring that everyone acts within regulation falls under board member fiduciary duty.
- Maintain the company’s reputation
When all basic board member duties are correctly fulfilled, the organization’s public standing remains solid. Yet, it is still vital for the director to keep abreast of the company’s reputation and implement necessary changes when it declines.
- Uphold integrity
Directors must be exemplary in adhering to legal and ethical obligations. Specifically, board members are in charge of defining fundamental policies, such as a Code of conduct, a Code of Ethics, and a Whistleblower policy, which protect their integrity.
Unusual board member responsibilities
In addition to traditional board responsibilities, members may face unusual duties such as follows:
- Crisis management and crisis communication. In a crisis or scandal, board members may be called to to conduct risk assessment and develop an organizational strategy in response to the risk. This could include communicating with stakeholders, developing key crisis communication messages, and working with management to develop a plan to address the situation.
- Fundraising. Board members may be asked to help with fundraising efforts. This could include making personal donations, soliciting donations from their personal and professional networks, or hosting fundraising events.
- Advocacy and lobbying. Board members may sometimes advocate for the organization’s mission or lobby on its behalf meeting with legislators or policymakers, writing op-eds or letters to the editor, or participating in public events.
- Mergers and acquisitions. When an organization considers a merger or acquisition, board members may play a key role in the decision-making processes. This could include reviewing financial and operational data, negotiating terms, and driving stakeholder engagement.
Key takeaways
- The roles and responsibilities of for-profit and are similar. Still, they differ in who they are responsible to and what regulations they comply with.
- Basic board roles usually include board chair, vice-president, secretary, treasurer, committee chair, and director. They all are united by care, loyalty, and obedience duties.
- Establishing an organization’s mission, hiring chief executives, providing financial oversight, and choosing a strategic direction are key responsibilities of the entire board.
- Paperless board meeting software is the number one solution for board directors. You can fully rely on board portals from iDeals Board — a top choice of our experts for efficient virtual board meetings and board member responsibilities management.
