The Importance of Board Composition

The composition of boards has attracted a lot of attention in recent years as investors have focused on the importance of the role board directors play. Boards are made up of people who bring their own special skills, knowledge and networks to the table. However, the primary purpose of any board is to work as a unit to monitor the performance of the business and help the CEO.

To accomplish this, the board must be well-equipped and structured to accomplish its mission. Often, this is achieved through the creation of a solid team that can find the truth and serve as an important sounding board.

Generally, it is advised that boards include a mix of new board members as well as experienced directors to ensure a balance of perspectives and expertise. The key to this is having an objective framework in place that allows nomination committees and the board in general to assess the skills, qualities and talents that are required to be a successful director candidate.

A common tool is a matrix of the board that includes individual characteristics that aid in the selection process of possible board candidates. But it is important to remember that just because a person has certain traits does not necessarily mean that they are the best person for the job.

In relatively new 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 can lead to “founders syndrome” in which the committees that nominate fail to recognize the need for new talent and a fresh board composition.