What is a board of directors? Essentially, a board of directors is made up of a group of people who are legally responsible for governing an organization. In the United States, there are at least 20,000 private companies and 60,000 publicly traded companies, all of which have boards of directors. The duties of the members of the board depend on the nature of the organization. For instance, board members at for-profit organizations must govern the interests of the shareholders. Not-for-profit organization board members are responsible for the interests of the stakeholders.
Are you interested in becoming a member of an organization’s board of directors? According to experts, there are 10,000 board seats that need to be filled each year. This number is determined by the average board tenure, which is normally eight years.
What Do I Have To Gain By Being a Board Member?
Almost all directors will agree that there are numerous advantages to their positions. Those who are on a board of directors can receive personal, professional and monetary advantages. For instance, directors will often receive cash and stock rewards, usually in the form of annual retainers or meeting payments. Directors will also often be given stock options and additional stock for each year they are on the board. Regardless of the size of the organization, directors receive generous monetary rewards. In fact, according to executive search firm Spencer Stuart, the average retainer for a member of a board of directors is $96,649 and the average per meeting fee is $2,224.
Aside from monetary rewards, board members strengthen their reputation throughout their industry and gain exposure to other executives who have expertise in their respective fields. Boards are also extremely diverse, often comprised of individuals with unique origins and backgrounds.
What Are the Duties of a Board Member?
As a member of a board of directors, you will have several duties and responsibilities. Board members are responsible for properly representing the organization and maintaining the vision for the organization that was set by previous directors. Directors are also responsible for reviewing the performance of the CEO, making decisions that are in the best interests of the stakeholders and shareholders and reporting to the public on news and changes. Common changes that are reported to the public include budget issues, fiscal accountability and newly-enacted policies.
How Do I Become a Board Member?
A board of directors will often search for new members when a specific director has resigned, retired or died. A board may also be looking for a new member that has expertise in a certain area. There are also several occasions where a board might be willing to add a new member because of his or her unique background, regardless of whether or not there are current openings.
A board of directors will often look for several qualifications when researching new members, such as professional experience, financial expertise and the ability to work well with others.
If you are considering becoming a board member, you should ask yourself these questions:
- What can I contribute to this board of directors
- Do I believe in the vision of the organization?
- Am I able to add the responsibilities of board membership to my daily life?