What is a Board Member?

//What is a Board Member?
What is a Board Member? 2017-10-01T02:25:28+00:00

Definition: A Board member is an elected participant on the board of directors of a corporation or the supervisory committee of an organization. The board of directors of a company is defined as the governing body that is tasked with decisions pertaining to the company’s heading. The key decisions for the business body as a whole come from the consensus of the Board.

What Does Board Member Mean?

What is the definition of board member? Board members are elected by the shareholders of the company and are responsible to set the company vision and appoint the chief officers to carry out that vision. Each member of the board participates in board meetings wherein the discussions of performance, critical roadblocks, turnarounds, and future strategy take place. In other words, they are responsible for the global direction of the company.

Each member is required to know his vertical (scope of business) along with its issues and challenges. He is also responsible to bring up any problems with his segments of the business to other members, so they can discuss a solution. All the members brainstorm on a solution and bring it to a vote. If a majority of the members can agree on the solution, the conclusion becomes an operative guideline and an essential component of the company’s strategy going forward.

Let’s take a look at an example.

Example

Let’s assume that a small bathroom tile company is having problems competing with its larger rivals. Top line managers see the inventory and sales problems and decide present this issue to the members of the board. Now, it becomes the responsibility of the board members research the issue and come up with a possible solution.

The board of directors study the market, consumer demand, competitors, competing products, and industry pricing structures. They find that they don’t think they will be able to compete due to their inability to reduce production costs low enough. Thus, they decide to change the vision of the company and start producing kitchen tiles because their production capacity is much more suited for this industry.

The board communicates their strategic decision with the chief officers who begin carrying out the new objectives of the company.

Summary Definition

Define Board Members: Member of the board means a constituent member of the governing body of an organization.