The Importance of Board Composition

In recent years, investors have focused on the importance of board directors. Boards are made up of people who bring their own particular skills, expertise, and networks to the table. However, the fundamental purpose of any board is to work together as a unit to monitor the performance of the company and support the CEO.

To accomplish that goal, a board must be designed to be efficient and well-equipped to fulfill its purpose. This is often accomplished by building a robust team that can ferret out the truth and act as a critical sounding board.

It is generally recommended that boards include an assortment of experienced and first-time directors to ensure a balance in perspectives and expertise. To achieve this, it is crucial to have an objective framework that allows the nominating committees as well as the board to assess the qualities, skills and abilities needed to be an ideal director candidate.

A matrix of the traits of board members is a common tool that can be used to help guide the selection process. It is crucial to remember that the mere fact that one has certain traits, does not mean that they are the perfect fit for the position.

In newer organizations, a special type of blockage can arise when the founders are the dominant. They believe they have the best idea and aren’t willing to take the risk of changing. This could lead to „founders syndrome“ in which the nominating committees do not recognize the need for new talent and a fresh board composition.