The Importance of Board Composition

Board composition has garnered a lot of attention in recent years as investors focus on the vital role board directors play in the business. Boards are composed of individuals who bring their individual abilities, expertise, and network to the table. However, the primary goal of any effective board is to work as a group to monitor the performance of the company and support the CEO.

To achieve this goal the board must be designed to be efficient and well-equipped to serve its function. This is often achieved by forming a group that can act as a sounding-board and find out the truth.

It is generally recommended that boards include the experience of both experienced and first-time directors to ensure a balance in perspectives and expertise. To achieve this, it’s crucial to have an objective framework that lets the nominating committees and the board to assess the qualities, skills and talents required to be the ideal candidate for director positions.

A popular tool is a matrix of the board that includes individual characteristics that assist in the selection of possible board candidates. It is important to keep in mind that the mere fact that someone has certain characteristics does not mean they are the best fit for the position.

In newer organizations, a special type of blockage may occur when the founders have the upper hand. They believe they have the best idea and don’t want to take on the risk of changing. This can result in a “founders’ syndrome” whereby nominating committees fail to recognize the need for fresh ideas and a refresh of the composition of the board.

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