The Changing Roles of Corporate Board Members

The corporate scandals have irrevocably changed the structure and operation of boards of directors. For an executive to be appointed to a board today, that individual has to demonstrate a solid understanding of corporate finance. Ideally, their rŽsumŽ should include a stint as CFO. That was not a requirement in the past.

Previously, boards were composed mainly of C-level executives (usually CEOs and CFOs) and occasionally representatives from the academic and venture capital communities. Today, companies are looking to add CIOs for their functional expertise, as well as HR executives for their understanding of compensation issues.

As the number of board members increases and their combined skill sets diversify, boards are forming more subcommittees. Besides audit and compensation subcommittees, boards are forming governance and nominating committees to ensure the lines between boards and management remain clear.

The role of board member takes up much more time today than it did in the past. To adequately keep tabs on the business, board members participate in regular?often monthly?conference calls between meetings. Many are also opting to meet independently of the senior managers after each meeting to discuss the company’s performance and operations on their own.

The role of the board member as an adviser is changing as well. Though many CEOs say they rely on their board for advice and many board members agree that mentoring is part of their role, today board members spend more time overseeing the company’s financial performance and operations rather than doling out strategic advice. Because they’re more bogged down in the finer points of financial reports, some board members also say the role isn’t as much fun as it used to be.