All About Boards of Directors

An introduction to boards of directors, how they govern, and more


What is a board of directors?

A board of directors is a governing body that evaluates the direction and strategy of a business or organization. While its structure and composition may vary from one entity to another, the board of directors is ultimately responsible for the success of the cause or company that it represents. 

Many boards are comprised of C-Suite executives, such as the chief executive officer (CEO) or chief financial officer (CFO). Directors are appointed or elected to guide businesses by utilizing their unique experience or skill sets.

Large conglomerates aren’t the only organizations that are managed by a board of directors. Many small, private organizations, like homeowner associations, rely on a board of directors to enforce policies and facilitate operational needs. Likewise, it is common for nonprofit organizations to adopt a volunteer board of directors model to manage fundraising and other essential processes.

Ultimately, a board of directors makes decisions following established bylaws or through voting on specific measures. Doing so ensures a consistent and fair process for all to follow.

What does a board of directors do?

The main duties of a board of directors are as follows:

  • Recruit, supervise and compensate managers and other key staff

  • Provide direction for the organization

  • Establish a policy-based governance system and enforce rules

  • Protect the organization’s assets and investments

  • Manage the efficiency of day-to-day operations


director meeting

How is a board of directors governed?


A board of directors will operate based upon the structure of its chosen governance model. Determining a governance model is essential or establishing a consistent and fair decision-making process. Without a clear model in place, there is likely to be confusion and disarray. 

The primary distinctions between different governance models are reflected in how decisions are finalized. 

General variations of governance models include:

  • A board of directors votes for one of many outcomes and the most popular option wins

  • A designated leader has the final say regarding an outcome based on the input of the board 

  • A board ranks all possible outcomes and the most popular option wins

  • A board compares all outcomes against each other and the most popular outcome wins

  • A board votes for one of many outcomes, however, some directors’ votes have more weight or value than others

How is a board of directors chosen?

Leadership Selection

Private Organization

Private companies or nonprofit corporations are structured around members, rather than shareholders. Members are responsible for electing directors, either from within their membership or from a larger external pool. Elections may involve multiple candidates running for multiple positions.


Public Organization

Public businesses or organizations will lay out the appointment or election process for a board of directors within its formal bylaws. Depending on where the organization organizes, there may be additional legal distinctions and local limitations to consider.


Term Limits

Board members are usually given staggered terms to prevent all of the board positions from being available for election at once. This ensures that there are always experienced, knowledgeable directors on the board, along with new directors who can bring fresh ideas to the table.



An organization’s bylaws should contain specific information on how the board of directors are elected, the length of the term served for each director, and how many voting members of the organization must vote for the board of directors election to be valid.

What are the roles within a board of directors?


Chief Executive Officer

The highest executive powers on a board of directors, overseeing all aspects of an organization’s day-to-day operations and development.

Deputy Executive Officer

A subordinate to the chief executive, though they may assist and serve as a leader in the latter's absence or when a motion involves the CEO.


Manages and reports the organization’s finances, acting as a chief consultant and expert on all relevant financial matters.

Board Member

Elected by the shareholders of the company and responsible to set the company vision and appoint the chief officers to carry out that vision.

How does a board of directors use committees, taskforces, and advisory councils?

board of directors

Although executives on a board of directors are typically assigned specific roles and areas of interest, there are occasionally matters that require specialized focus.

The groups, organized within the board, are often structured as follows:



A committee is often used to address recurring or permanent matters within an organization, such as internal accountability or fundraising.

  • A standing or operating committee is a committee type that an organization uses on a continuous basis. They can be outlined in the organization’s bylaws or its board operations and policy manual.

  • An ad hoc committee, on the other hand, is formed for a limited time to address a specific need. When the work of the ad hoc committee is completed, the committee is dissolved. An ad hoc committee may exist for less than a year or a year or more depending on the extent of the work assigned to it.



A taskforce can be formed if there is an objective that can be achieved in a relatively short time. Special events planning or analyzing a proposed merger are examples of work that can be handled by taskforces.

Taskforces typically exist for less than a year or the duration of the matter it is addressing.

Advisory councils


Advisory councils assist boards in carrying out their work by providing expertise and advice in selected areas. Advisory councils do not have any governance responsibilities and are a way to include former board members, potential board members, subject matter experts, and others in the work of the board without placing them on the board.


How does a board of directors make decisions?

board of directors

A board of directors will make decisions per its bylaws. Bylaws are the internal rules and structures that establish how things will be done.

They can apply to anything, including how meetings are run, what responsibilities officers have, the organization’s purpose, etc. Bylaws must be voted on and passed by a board of directors to take effect.

Bylaws do not have to be permanent documents. They are often amended to better serve the organization, so long as the amendment is agreed upon and executed under existing rules. 

An organization's consistent decision-making process will vary from one organization to another based on how its bylaws are set out.

A common framework for board decision-making:

  1. The chairperson or CEO will call a meeting of the directors and set an agenda

  2. The board will evaluate agenda items, which may consist of actions like newly proposed bylaws, bylaws amendments, or more immediate decisions

  3. Each item may be brought up for discussion, debate, or a vote amongst the board members

  4. If the action is approved, the directors can then sign it into effect

Planning for success

Within any organization, the board of directors is often responsible for making significant decisions that impact the organization and the individuals within it. 

Planning for sustained organizational growth begins and ends with the people on a board of directors. Having all of the right resources available to the board to do its job is critical for future success. While there are no right or wrong ways to organize a board of directors, clearly defining roles and governance structures will prevent issues down the road.


Learn more about how Board of Directors make decisions


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