The board of directors is a strict and structured system in which everything must happen according to the charter and the policy of the company, as well as the legal responsibilities. Each member of the board of directors has a specific role and responsibility, each should do his/her own thing and not touch anything that is outside of their competence. However, sometimes there are controversial situations that have a right to exist. In this article, we will talk about one of those situations: can a board member be a consultant?
Can a board member be a consultant?
There is one short answer to this question, “yes.” But let’s break it down in more detail. So whether a board member can be a consultant is a fairly common question that pops up in various online forums. And every time under the answers to this question, professionals of their business answer positively explaining that a board member is already a consultant and advisor. However, you should not advise individual board members, or the CEO personally, you should do so in the presence of all participants in the boardroom. Otherwise, it can damage your reputation, leading to a decrease in the effectiveness of your opinion and cooperation with your colleagues. And all because other board members may now see you as a threat because you have been given credentials or information that they don’t have.
As you know, directors only get paid according to a fixed schedule, and consultants take money in return for their services, so if you seek to privately provide your services for a fee, it will derail the entire board concept. Anyway, consultants can be members of the board, but more often than not, or only in some cases, such as when their benefits will be hinged on a decision, they can be disqualified from voting.
Primary Responsibilities of Board Members
Regardless of the industry in which a company operates, its size, and status, all organizations have responsibilities of board members that must be met, as follows:
- Hiring and supervising an executive director
One of the main purposes of the board of directors is to hire, evaluate and supervise the executive director, for this they select the most suitable candidate by interview and vote. The board itself sets the guidelines for the CEO to follow. But before proceeding to select a candidate, the board should analyze the company’s operations and highlight its strengths and weaknesses
- Greater financial control
The board works together to plan the company’s budget and ensure strong controls for incoming and outgoing funds
- Creating a strategic plan
It is the board of directors that decides which way to turn the company around, what goals to pursue, and what strategies to pursue. The board may create a strategic plan for the year or for the next few years and should consider both short-term and long-term goals. Then, on the basis of the reports provided, the board analyzes the company’s progress, and if there are problems, it changes its approach or objective.
- Legal and ethical integrity
All companies, without exception, must abide by laws and regulations. All board members have a fiduciary responsibility and must ensure full compliance with legal obligations.
- Responsible stewardship of resources
The board of directors must ensure that the company’s assets are protected and properly managed. Directors must operate transparently and comply with liability requirements so that in the event of litigation, you will be absolved of any liability.