Characteristics that Make a Board of Directors Effective

The board of directors is the key apparatus for attaining top-level separation of control and management functions. Typically, the board receives authority for control from stakeholders of the concerned corporation, with its roles being is hiring, firing, compensating, and guiding top management on behalf of the shareholders. This form of delegation occurs because each shareholder does not own a considerable amount of stake that would give them a sufficient incentive to devolve resources in a manner that harmonizes with the interests of all stakeholders. The board of directors must therefore assume certain characteristics to function properly and guarantee a prime internal mechanism for effectively controlling the actions of top management.

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            Within my firm, the board of directors possesses four specific characteristics that make it effective in its role of governance. Firstly, the board size tends to maintain a certain minimum number of members, usually between seven and 15, to ensure enhanced performance (Yocam et al. 16). Boards with more than eight members tend to be less effective and more susceptible to the Chief Executive Officer’s (CEO’s) control. When a board size gets bigger, it becomes less a part of the management process and more of a symbol (Willekens et al. 9). Secondly, the company’s board ensures that one-third of the board members comprises independent directors owing to the fact that the chairman of the board is an executive director. Thirdly, duties of the CEO are separate from those of the Chairman of the board so as to guarantee the reduction of agency costs as well as improve performance. Lastly, the board is diverse in terms of gender, culture, and ideas for more effective decision-making, enhancement of corporate reputation, and better utilization of talent.     

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  In conclusion, there are certain characteristics that an effective board of directors should maintain. They include the maintenance of the number of members to a minimum of 15, the correct composition of indent directors, separate duties of the CEO and the board chairman, and espousal of diversity. Without exhibiting these traits, a board is more likely to experience challenges in its governance.

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