The role of the board of directors and its members

Peter Drucker, the “father of modern management” once said: "The first task of the board is to make sure that the company has the right strategy."

This sounds simple enough, but in practice this focus can be hard to achieve and maintain. Our research shows that only 44% of boards spend more time looking forward than reviewing past performance, and that nearly half would like to spend more time on strategy. What’s more, our analysis of FTSE 100 board evaluation disclosures suggests boards are over-indexing on risk and compliance at the expense of forward-looking, transformational thinking. They are caught up in operational detail, disconnected from innovation, and misaligned on strategy.

Pro-tip: Download the board effectiveness checklist to quickly assess what your board is doing well and identify opportunities for improvement.

While all directors are jointly responsible for a board’s actions and decisions, individual roles carry specific duties.

Individual directors are legally required to act in the best interests of the organisation and its stakeholders. These fiduciary duties are enforceable obligations that protect organisational integrity and underpin effective governance.

They fall into three core categories:

• Loyalty: Avoiding conflicts of interest and putting the company’s interests first.
• Care: Acting with appropriate diligence, skill, and care based on their experience.
• Good faith: Honestly believing that decisions are in the company’s best interests.

These responsibilities are set out in the Companies Act 2006 in the UK, and in the US, they are shaped by state laws and legal precedent.

Board members contribute to effective governance by actively participating in the board’s work. Many boards establish standing committees to focus on key areas such as audit, risk, and remuneration. These committees are usually composed of non-executive or independent directors and allow for more detailed oversight of specific matters.

Typical duties of committee members include:

• Diligently preparing for meetings and reviewing relevant documentation.
• Actively contributing to discussions and decisions.
• Developing and applying specialist knowledge or experience where relevant.
• Escalating material issues to the full board when needed.

Beyond committee work, all directors are responsible for exercising independent judgment and making informed decisions in the best interests of the company and its stakeholders. Key responsibilities include:

• Attending all board and relevant committee meetings unless reasonably excused.
• Critically evaluating proposals and not automatically endorsing management views.
• Asking questions, probing assumptions, and documenting dissent when necessary.
• Ensuring access to sufficient information before making decisions.
• Remaining alert to material risks or red flags.

Board Intelligence’s Board Value Index shows that just 31% of directors feel confident making well-informed decisions, and that drops to 25% on topics like sustainability and technology risk.

We found the biggest barriers to faster, better decision-making are the rigidity and inconsistency of board decision-making processes, followed by unclear roles and responsibilities, poor time management, and the quality of information provided.

A board’s role is not to manage but to guide. Individual directors support the executive team by asking the right questions, offering expertise, and serving as a sounding board. When done well, this support provides clarity, confidence, and constructive challenge.

Our board portal and board reporting software — underpinned by methodologies such as the Six Conversations Model and the Question Driven Insight Principle —help chairs, directors, and boards to work more efficiently and effectively.

Participation and decision-making are supported by:

• Centralised, structured, and secure access to board and committee packs, agendas, and background papers.
• Timely, accurate board and committee meeting minutes that log decisions and discussions.
• Strategic agenda planning that aligns meeting time with organisational priorities.
• Intelligent briefs that prompt report writers to structure content around purpose, context, and decisions required.
• AI-powered nudges and real-time feedback that help management to prepare concise and insightful board packs.
• In-app annotations, comments, and AI-powered meeting preparation tools, so directors can share views, highlight concerns, and surface questions before meetings.
• Support for virtual and hybrid governance for global companies and non-executives with limited time.

Spencer Stuart’s Measure of Leadership survey of 2,400 CEOs and directors found that fewer than a quarter of chief executives feel effectively supported by their boards.

The relationship between the board and executive team is a defining factor in an organisation’s effectiveness. When it works well, it creates a cycle of challenge, trust, and accountability. But when it’s unbalanced, for instance, when the board is too hands-off or too controlling, performance, culture, and strategic momentum all suffer.

Here’s how the board should engage with management across its key responsibilities.

The board’s responsibilities include setting a clear, forward-looking strategy and confirming that management understands what success looks like.

This means:

• Focus and alignment between the board and executive team on strategic goals, priorities, and risk appetite.
• Approving an annual business plan or budget for the business.
• Setting measurable performance indicators that reflect both short-term delivery and long-term value. A dashboard can be a useful way to provide a visual summary of the organisation’s performance and outlook.
• Creating clarity on the outcomes expected, not just activities.

Boards are responsible for hiring the CEO, supporting them to perform to the best of their ability, and then evaluating them.

The CEO performance review process includes:

• Conducting regular performance reviews based on agreed metrics and leadership behaviours, typically led by the chair or a dedicated committee.
• Regular board reviews to identify individual learning needs as part of a board evaluation process that assesses both director and board performance.
• Providing constructive feedback and development support.
• Taking a long-term view of succession planning and leadership continuity.

The CEO evaluation is a valuable opportunity to reflect on strategic delivery, cultural leadership, and organisational resilience. Many high-performing boards now use board evaluation tools and deep-dive assessments to determine how well this relationship functions and where it can improve. 

The best boards know when to step in and when to step back. Striking the right balance between governance and guidance is an ongoing challenge.

• Oversight means holding management accountable for results and risks.
• Support means bringing insight, clarity, encouragement, and strategic challenge.

When boards have access to high-quality reporting, they can better offer real-time value. Tools like Lucia and Insight Driver support clearer, sharper management reports that equip directors to ask better questions and engage more productively. 

The best board members combine technical expertise with independent judgment, strategic thinking, and the curiosity and confidence to challenge constructively.

Although emerging technologies are reshaping business models, research suggests that boards continue to value foundational competencies and traditional skills. In PwC’s 2024 Annual Corporate Directors Survey, 35% of directors said they plan to add financial expertise to their board in the coming year, but only 10% said they sought directors with generative AI experience.

The foundational competencies and skills still highly sought after by boards include:

• Governance expertise
• Strategic thinking
• Integrity and independence
• Industry knowledge

Directors must understand how to govern well, not just what the business does. This includes fluency in board duties, committee structures, and the regulatory landscape.

Strategic thinking is particularly important. To perform the board’s steering and supervising roles effectively, directors must connect short-term performance to long-term value, and ask the right questions to spot emerging risks early, understand the assumptions behind management’s plans, and offer fresh thinking. Boards that lack this capability often default to passively reviewing information, rather than actively shaping the organisation’s future.

A director’s independence is more of a mindset than a compliance requirement. Effective board members resist groupthink and make decisions that serve the organisation’s best interests, not their personal agendas. This requires clarity of purpose, strength of character, and critical thinking.

Effective boards build on the collective intelligence of their members by welcoming diverse viewpoints and encouraging respectful challenge.

While governance skills are transferable, some decisions demand specific sector or subject-matter insight. Directors with deep industry knowledge, for example, can contextualise performance trends, anticipate regulatory shifts, and spot strategic opportunities that may not be obvious to outsiders.

When building a board, the goal should always be to complement management with relevant insight — for example, when evaluating strategy, overseeing risk, or allocating capital – without over-indexing in any one skill set or knowledge area.

A board with the right mix of commercial, operational, and governance skills is far more likely to deliver strong oversight and better outcomes. And in a complex, fast-moving, and increasingly interconnected global landscape, it’s vital that the board represents a broad set of skills, experience, and knowledge.

Board recruitment requirements should be led by where the organisation is going, not where it’s been.

Pro-tip: Read our article on how high-performing boards approach board development.

Board member appointments and evaluations should follow transparent, structured governance processes. Appointments and tenure guidelines clarify expectations and performance, while evaluations help boards assess individual and collective effectiveness over time.

Organisations should define consistent appointment, tenure, and succession policies. Appointments should be based on clearly defined criteria, such as expertise, experience, sector knowledge, and diversity of thought.

Typically, boards:

• Identify skill gaps aligned with the company’s strategy.
• Use nominating committees to vet and recommend candidates.
• Define fixed terms (e.g., three-year renewable terms) with limits on consecutive service to avoid stagnation.

These structured guidelines support continuity, consistency, and measurable expectations for every director.

Effective board evaluation involves a combination of internal and external assessments:

• Self-assessment surveys provide a high-level, light-touch review of the board’s operations and contribution.
• Peer-to-peer feedback surfaces individual strengths and areas for improvement.
• External board performance reviews offer depth, objectivity, and credibility.

Board Intelligence offers flexible board evaluation options tailored to your board’s needs, whether you're starting with self-assessments and surveys or opting for expert-led external reviews. We measure the board's effectiveness using a proprietary methodology called ‘the 5 I's of board effectiveness', which looks at five essential pillars of board performance: individuals, infrastructure, information, impact, and innovation.

Boards of directors are made up of members with distinct roles, each contributing to the board’s collective accountability.

To manage workload and provide focused oversight, boards operate through committees and differentiate between executive, non-executive, and chair roles.

Chair

The chair leads the board, sets the agenda, and ensures meetings are productive. They maintain high standards of governance, facilitate balanced participation, and act as the main liaison between the board and the CEO.

Executive directors

Executive directors are typically senior leaders from the management team, such as the CEO, CFO, or other C-suite executives. They bring operational insight to the board, present strategic proposals, and are accountable for implementing the company’s strategy and managing day-to-day operations.

Non-executive directors (NEDs)

Non-executive directors provide independent oversight and challenge. They bring an external perspective, test management assumptions, monitor performance, risk, and succession planning, and often sit on board committees such as audit or remuneration.

Committees allow boards to focus on specific areas. Each committee is led by a chair who oversees detailed work in their domain.

• Audit committee: reviews financial statements, monitors internal controls, oversees auditors, and ensures financial reporting integrity.
• Remuneration committee: sets executive pay and incentive structures, aligns remuneration with long-term performance, and oversees disclosure of director compensation.
• Nomination committee: leads board succession planning and recruitment, evaluates board composition and diversity, and oversees director evaluations and reappointments.
• Risk, ESG, or technology committees (where applicable): monitor emerging risks and thematic areas, ensuring alignment with regulations and stakeholder expectations.