The Importance of Board Composition

The composition of the board is board composition the mix of people that a board selects to govern an company. This includes the balance between outside and inside directors as well as the proportion of men, women and minorities, as well as whether board members come from different generations. It also takes into account the proportion of expertise in governance and management issues, such as fundraising and legal risk.

Diversity is a key element in a good board composition. Many boards are searching for ways to diversify the membership. To determine gaps in diversity, boards can conduct an audit of the current board members, and then determine where recruitment efforts are required. Diversity should be considered in all dimensions including gender, race as well as education and age, along with skills and experience.

A matrix of board needs can help boards to understand what kind of individuals they need in their board. A matrix is a grid similar to Excel which lists the characteristics of directors on the board and the abilities required to perform their responsibilities. This information enables the committee to develop a shortlist of potential nominees and determine their ranking based on how they meet the requirements.

A board must balance the interests and requirements of shareholders and the management team. This usually means that the board consists of a mixture of inside and external directors, with the inside directors having experience in managing businesses or non-profits. Boards will also have a chairperson who is responsible for the work of the board as well as the committees.

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