Within every successful organization lies a powerful engine room — the executive committee. Here, a select group of leaders steers the company. Their decisions have a major impact on the organization’s success.
Zippia’s data science team reveals a staggering statistic: over 5,588 individuals currently hold executive board positions in the USA.
The executive committee shapes the organization’s vision, manages risk assessment, and drives board effectiveness. Their decisions influence everything from product development to employee well-being.
So, what exactly is an executive board member in practice?
This article delves into the nature of executive board positions and responsibilities. We’ll examine the board’s composition and how clear executive communications affect the business.
What is an executive board?
The executive board comprises senior-level executives such as the CEO, CFO, and COO. While sizes vary, a study by Bain Capital Private Equity finds that seven members are ideal for effective decision-making.
This simplified structure enables the board of executives to serve as a flexible link between the board of directors and the practical execution of their broad goal.
The executive board also has a fiduciary duty to manage the risks and opportunities associated with the various business entities in which the company operates.
In some organizations, the executive board structure may also liaise with the United Nations Charter (UNC) and the Economic and Social Council.
In addition, executive board members are authorized to act on behalf of the full board of directors in urgent situations. Therefore, executive session board meetings are crucial.
Board of directors vs. executive board: The difference
Managing a company involves a careful mix of strategic vision and day-to-day execution. The executive director, who is responsible for the organization’s overall well-being, might benefit from the expertise of subcommittees known as executive boards.
This way, the board of directors can still assign specific responsibilities while maintaining control.
To understand their functions better, let’s take a closer look at their key differences:
| Feature | Board of directors | Executive board |
| Composition | Larger group with internal (company executives) and external (independent) directors. | Smaller group with senior-level executives (CEO, CFO, COO). |
| Function | Sets overall strategic direction, oversees management performance, and ensures ethical and legal operation. | Implements strategic plans, makes day-to-day operational decisions, and manages resources. |
| Authority | Holds ultimate authority, appoints and removes CEO and executives. | Derives authority from the board, and acts on their behalf with some decision power. |
| Time commitment | Meets quarterly or less frequently. | Meets more regularly (weekly or bi-weekly). |
| Focus | Long-term vision, oversight, and accountability. | Day-to-day operations and execution. |
| Supporting structure | May rely on external committees for specialized advice. | Often supported by an executive board secretariat. |
Executive board of directors roles and responsibilities
The composition of an executive board differs depending on the type and size of the organization, as outlined in the organization’s bylaws. However, having a diversity of expertise across various areas such as finance, operations, marketing, and technology benefits all boards.
Research indicates a strong link between board diversity and board success. Companies with significant gender diversity are 28% more likely to outperform their peers.
Let’s break down the composition of a typical executive board and highlight the unique expertise that each company’s employees bring to the table.
- Chairperson (chairman of the board). Guiding the board’s direction, the chairman leads board meetings, sets agendas, and acts as the board’s external representative.
- Vice chairperson. Being the second-in-command, they support the chairperson and assume their responsibilities when needed.
- Chief executive officer (CEO). The organization’s leader is responsible for overall strategy, operations, and performance.
- Chief financial officer (CFO). Oversees the financial health of the organization and is in charge of accurate financial reporting and compliance
- Chief operating officer (COO). Manages day-to-day operations, ensuring smooth and efficient functioning across all departments.
Pain points in corporate executive boards
Even the most seasoned leaders encounter obstacles in their professional journey. However, being aware of these challenges and knowing how to solve them makes a difference. Here, we explore some of the most common challenges executive boards face, along with practical solutions to navigate these hurdles.
Challenge 1: Communication breakdowns
Studies show that despite its importance, a staggering 86% of employees and executives blame unclear communication as the leading cause of workplace errors.
When something is unclear, it causes confusion and frustration. This, in turn, hinders productivity and creates unnecessary moves.
Solution: Smooth operations and the accomplishment of organizational goals depend heavily on effective communication protocols. These protocols help establish clear expectations regarding the frequency and manner of communication sharing.
Furthermore, open and honest dialogue, along with modern communication tools like board portals, is key to building trust and identifying potential issues early on.
Challenge 2: Strategic alignment issues
Diverging priorities and an unclear long-term vision often create a situation where board members work at cross-purposes. As a result, without clear communication and prioritization of strategic goals, an organization struggles to focus its efforts.
Solution. Holding regular executive board meetings where board members work together to define objectives and identify key performance indicators (KPIs) helps.
Challenge 3: Risk management challenges
Despite the prevalence of reactive measures, nearly three-quarters of companies claim to have an incident response (IR) plan. However, there is a large gap between having a plan and being fully prepared. For example, only 63% of those firms regularly assess their risk management strategies, exposing them to unexpected challenges.
Solution. Effective organizations don’t wait for crises. Instead, they conduct thorough risk assessments to identify potential threats, develop a comprehensive risk management framework with clear mitigation strategies, and review and update it if necessary.
Challenge 4: Talent acquisition and retention
Most managers (61%) face challenges attracting and retaining highly qualified board members, leading to a lack of diverse perspectives and expertise in the boardroom.
Solution. Top talent desires a workplace offering opportunities to learn and grow, not just a salary. An energetic work culture and a competitive package attract the most skilled applicants.
Challenge 5: Stakeholder engagement difficulties
One of the biggest challenges facing a board is effectively representing the interests of the organization. A limited understanding of stakeholder concerns, a lack of communication, and even strained relationships all make it difficult for the board to represent the organization’s interests effectively.
Solution. It’s best to group stakeholders based on their interests and concerns and develop targeted communication strategies for each, using their preferred channels.
Boardroom in change implementation
Innovative solutions sometimes struggle to get off the ground because executive boards are resistant to change. Even when a solution shows significant promise, it may meet pushback from executives unwilling to take risks or unaware of its full potential.
Here are some suggestions to assist executives in making positive change:
- Adopt a data-driven approach. Back ideas with data and industry benchmarks to build a strong case. Also, quantify the potential benefits in a way that resonates with the board, like increased efficiency or cost savings.
- Focus on value. Frame the solutions within the context of the organization’s overall goals. Show how these proposed solutions can tackle current challenges.
- Start with a phased implementation. Propose a gradual implementation strategy that will be piloted in a single department with input from the steering committee. This enables controlled testing, data collecting, policy guidance, and modifications before a broad launch.
- Offer a pilot program. Running the solution in a smaller department or on a limited scale allows for real-world testing. Highlight the pilot program’s success at the next annual session for wider adoption.
Key takeaways
- The executive board ensures an organization’s health. Unforeseen challenges, such as communication failures, strategic misalignment, or personnel retention concerns, might be harmful.
- Communication and strategic planning are essential for achieving results. Prioritize clear communication procedures, open conversation, and regular strategic planning sessions with specified targets and KPIs to keep the board on track.
- Conduct risk assessments, create a complete risk management framework, and evaluate and update it regularly to be prepared for future threats.
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