The Importance of Board Composition

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October 23, 2023

The composition of the board is the mix that a board chooses to oversee an organisation. This includes the balance of directors who are inside and outside directors and the proportion of women, men and minorities, and whether the board members are of different generations. It also takes into account the proportion of experts in matters of governance and management such as fundraising, or legal risk.

Diversity is a major driver of good board composition, and many boards are seeking new ways to diversify their membership. It is possible to begin by conducting an audit of their current board members to identify diversity gaps and prioritize where efforts to recruit should be focused. Diversity must be considered across all dimensions including race and gender in addition to education, age and race along with skills and experience.

In addition to taking into account diversity, an effective board needs matrix can also help boards to determine the type of people they need on the board. A matrix is a grid like Excel which lists the characteristics of board directors and the competencies required to carry out their duties. This information enables the committee to make a shortlist of possible nominees and then determine their ranking based on how well they meet the criteria.

A board should be able to balance the interests of shareholders alongside those of the management team. This typically means that the board comprises an assortment of inside and outside directors, and that the inside directors are experienced in managing nonprofits or businesses. Boards also tend to have a chairperson that leads the committees of the board and oversees the activities of the board.

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