Different Categories of Boards of Directors

Board members meet with company members to formulate strategies.

A board of directors is the main governing body of a company. It is responsible for approving and implementing decision-making strategies that will ultimately affect the company and its mission. Boards of directors vary in function, competency, size, economic outlook, composition and structure. Some boards function as decision centers, others play advisory roles while some function merely as trustees. There are four essential categories of boards of directors, writes Cass Wheeler in the book "You've Gotta Have Heart."

Policy Board of Directors

Policy boards of directors formulate priorities, mission, vision, overall direction and corporate strategy. They determine policies a company must adhere to, including policies on collaboration, alliances, partnerships, salaries, bonuses and compensation. Their decision-making authority overrides that of the CEO or executive of the company. Policy board members oversee senior staff and hold them accountable for achieving established priorities. They hold regular meetings with staff members to monitor their performance. Policy boards are the final decision-making authority and executives must get their approval before implementation.

Governing Board of Directors

A governing board works in collaboration with organizational members to realize the objectives of a company. Decisions pertaining to the company are made jointly and responsibilities and accountabilities are clearly delineated. There exists a true partnership between the board and the company. A governing body provides ethical and effective leadership, stability and resourcefulness to a company. Professionals, including attorneys, physicians, certified public accountants, psychologists, local ministers, local politicians and local union representatives typically constitute a governing body.

Working or Operating Board of Directors

A working or operating board is the executive management body of a company. This category of board of directors is common to newly established organizations that are on tight staff budgets. The authors of the book "Understanding the Construction Client," write that operating boards comprise property directors, supply chain directors, customer service directors, finance directors, sales directors and human resource directors.

Traditional Board of Directors

A traditional board of directors functions as a figurehead that merely rubber-stamps decisions a company makes. It has no managerial or policy making roles. Traditional boards are common to nonprofit organizations and board members play advisory roles. They help a company plan and execute events and programs, guide them in policy development and strategy implementation. Traditional boards typically consist of non-organizational members.

References

• "You've Gotta Have Heart"; Cass Wheeler; 2009
• "Understanding the Construction Client"; David Boyd and Ezekiel Chinyio; 2006
• "The Board of Directors: 25 Keys to Corporate Governance"; Marianne Jennings; 2000
• "The Board of Directors and Business Management"; Melvin T. Copeland and Andrew R. Towl; 2008