Ask Christa! What Do Boards of Directors Do? (S3E32)

Introduction and Listener Question

Hi everyone and welcome to Ask Christa! the place where you can ask questions about how to work through business challenges and workplace issues. I'm Christa Dhimo and today’s listener question is a question I’m asked a lot, but it’s usually at a party after someone finds out what I do for a living. The question is: “What do Boards of Directors do?”

And I’ll admit—most of the time they’re being sarcastic, but I ignore that and joyfully answer their question anyway. My typical party answer is that Boards of Directors, which I’ll refer to as a BoD (and this is when you abruptly halt the party music): serve as an oversight and governing body for the success of an organization, and that organization can be a for profit or nonprofit business OR certain government entities. (you can… restart the party music now…)

The General Role of a Board of Directors

If you Google “What does a Board of Directors do?,” you’ll see a lot of information and examples, so I’m going to quickly skim over this next part.

The BoD should be a team of experienced leaders with expertise that is useful to the organization’s success—and sometimes that success means growth and expansion, but sometimes it means reductions or contractions, too. The expectation is each Director contributes to, supports, and approves big decisions as a means to steward or guide an organization through good times AND bad times. And they do so in an ethical and compliant manner, while also holding the CEO and executives accountable to his or her approved goals, and providing guidance, advice, and coaching if those goals might be missed or need adjustment. 

Some BoDs get farther into the details than others, and we’ll talk about that later on when we get to how the BoD must match the needs of the organization.

But for now, let’s stick with the goals, and yes, goals include sales and growth, but they ALSO include ways to avoid or mitigate and manage risks. They could include setting up the organizational strategy, managing certain aspects of (or directly working with) various stakeholders. The BoD will be involved in and approve major decisions, such as large buys and partnerships, mergers and acquisitions—even hiring certain highly compensated employees who will be paid a high salary with a presumably high bonus rate and likely awarded shares of the company, too. 

A Board Must Match the Needs of the Organization

Something a lot of people don’t think about is how important it is to match a BoD with the organizational needs. The membership, design, management, and utilization or focus of a BoD will and should change based on organizational needs: how mature the organization is or how long it has been in business; or whether it’s in a high-growth stage or reset stage; the size of the organization by way of revenues and by way of employees and contractors; the strategic goals and what is needed to move the organization up to the next inflection point.

My board work has been with smaller and mid-sized companies where I see early Boards members include friends of the founders, or those who knew someone who knew someone, or (of course) early stage investors. And as long as that is an appropriate board design, offering an appropriate level of experience and expertise, and the BoD is being appropriately utilized to move the organization to the next step, then a BoD that includes friends of the founders or those who knew someone who knew someone and your early stage investors are probably the right people to be on your BoD. 

For example, early stage product startups are reliant on network, fundraising, cash management, and good operational quality. At that stage, you need a BoD that has the network, the fundraising clout, and some operating partner experience to support the smart build and operational quality as you develop your product, prepare to launch your product, and grow your organization going forward. 

A Board Must Match the Growth of the Organization, Too

But as organizations grow, and as they develop new products and require additional support services and potential partners or outsourcing providers, and as their global reach expands or they shift all of their operations into a larger model overall, the business becomes more complex. You may have new global compliance considerations, broader workforce laws to contend with (and for good reason), different investor rules, larger contracts that need to be managed differently, a broader customer base that ALSO needs to be managed differently—and taken care of very well. 

Most times you can manage any lags in expertise and experience by filing in those gaps with a strategic hiring plan (and BTW, this is why and when you need a very strategic HR leader involved—this is about the TALENT of your organization, and you do not want to mess that up—your employees and contractors are the ones doing the scale-up work, so Hire well, hire smart, retain well, retain smart).

With that level of growth and increased complexity, though, the utilization or function of the BoD will have to grow, too. It doesn’t mean you pack the board with a bunch of new members, or turnover all the start-up members, but it DOES mean you have to transition and transform the board in some ways to support the evolved needs of the organization. It could be changing the frequency of board meetings. It could be adjusting the type of information you communicate to the board. It could be the way you provide updates to the board in between each board meeting, or all of the above.

Here's an example of how a BoD may need to evolve: do ALL existing members have experience with scaling up a small, geographically local business to become a mid-sized global business within a timeline of, let’s say, two years? Maybe, but if NOT, and if that’s the GOAL, and if the Board or CEO and Executives believe that expertise and experience are “material” enough for the organization to execute as flawlessly as possible, they may need that extra support at the Board level. It might be they bring on 1-2 new independent board members with experience in scaling a business similar to the evolved needs of the organization. Their inclusion would strengthen the BoD’s stewardship for that new growth phase and future growth, too. How do you hire for new Board members? Most times a BoD hires an objective third party to assist with this.

And a Board Must Match the Maturity of an Organization

As organizations continue to grow and emerge and expand and they reach a maturity where they are humming along, also known as a SCALE of economy where they have smoothed out the rough patches and are running pretty well, the strategic objectives turn toward maintaining cost control with a steady increase in revenues while managing risks so they don’t REQUIRE a big mitigation or fix-up expense. The Objectives also turn toward managing the existing customer base to keep them really happy, offer additional products and services as part of the growth, and attract new customers to expand your customer base at the expected pace of growth.

Fundraising is still required, but emerging organizations coming out of startup mode and that first growth mode can usually keep the financial inertia going without needing a big infusion of cash every year as a startup or a first-growth inflection point might need.

My point is that early stage companies, first-growth stage companies, and emerging companies have different needs and they likely need different board members, too, or at least different mindsets at the board level. 

The same goes for larger organizations—those more established that are often in a place where they have cycled through many years and are able to appropriately mitigate issues, more closely predict performance, and have earned a reputation that serves as an intangible value driver: they have earned trust with the public and investors due to a consistency of performance, which enables them to shift some of their strategy toward broader gains as they continue to grow and develop.

What to Look for in Your Directors

So, what should you look for in your Directors? Probably not what you think about.

Yes, experience and expertise for sure, but you know what I’ve seen be FAR MORE critical for an effective Board to run properly and do its job? Traits like being able to work in a team. The capacity to learn and care about the organization you are stewarding. Reading what you’re expected to read before a board meeting, and asking questions ahead of time if necessary. Listening to key points in the board meeting so you are elevating the discussion instead of focusing on your own agenda related to something else and derailing the discussion.

Not insisting on 1:1 personal pre-reads with company resources ahead of each board meeting, then additional review meetings in order to retain the information. (if you know, you know…)

Traits like having a calm nature that can effectively manage a crisis. The ability to listen to problems and respond by asking critical thinking questions to support a solution vs focusing firstly on who’s to blame.

And of course, whether a Director can be firm but fair, holding a CEO and the executive team accountable while also developing and coaching and guiding them for whatever they may need for their own success.

Setting Up Your BoD: Ask Your Startup Lawyer

As you select your first group of board members, you may begin with Advisors who help you setup and get moving along—advisors who have shown a level of competency and also a level of support and dedication to your success. You will for sure include early investors too, usually based on how much ownership they have because of their investment. 

You know who will help you with all of this? YOUR STARTUP LAWYER. 

Does that surprise you?

Being a BOD member involves various agreements, and this is where your startup lawyer will help you. Those agreements are related to fiduciary responsibilities, ethics, compliance, and governance and will be included in your BoD contract. There will be additional agreements related to behaviors, too, such as non-disparaging agreements, non-disclosure agreements, and likely non-compete and non-poaching or non-solicitation clauses so if a member leave the board, they cannot join the board or the leadership team of a competitor within a certain amount of time nor can they approach or recruit key talent from your company to work at a competitor's company within a certain amount of time.

So there's my answer. What do boards of directors do? The direct answer to the question is very straightforward, but it’s not always easy to learn about how they are selected, why they are selected, and what’s involved after their selection. As with other aspects of business, this shouldn’t feel like a mystery.

Additional Resources

For your resources, I’ve included an article from Investopedia written by James Chen, reviewed by Jefreda R. Brown, and fact-checked by Yarilet Perez. The article is called, “The Board of Directors: Definition and Role,” and it was updated in May 2025. It lists the general things to know about a Board of Directors, including different aspects of a Board that I didn’t get into—and it has a section about what makes for a successful Board.

I’ve included an article from BoardSource, which is a nonprofit research resource for nonprofit Boards. Published this month, the article is called “Board Member Roles and Responsibilities.” There are slight differences in for-profit and non-profit (or not-for-profit) Boards, so I wanted to be sure I included this one also.

Of course, I’m including a well written article focused on the best attributes of BoDs, too. The article is written by Paul Smith, the Founder of Future Directors Institute. It was published in January 2023 and it’s called, “9 Attributes of Effective Board Directors.”

AND, I’m giving you a bonus, also from Investopedia—I love that site: it’s written by Troy Segal, reviewed by Gordon Scott, and fact-checked by Suzanne Kahvilhaug. It was published in December 2021, and it’s called, “Evaluating the Board of Directors.” One of the BEST ways to learn about what a BoD does AND how to have a FUNCTIONING and FUNCTIONAL BoD is to learn what it takes to evaluate a BoD. Check it out.

Final Thoughts

Here are my final thoughts. Good boards get the job done, great boards create high value fast, and mediocre or bad boards destroy companies. I’ve seen it, and it’s especially common with the smaller and mid-sized companies. Part of the work I do is to enable Boards to re-invigorate their roles, break bad cycles and habits, and put them in a place where they are ready to support innovation for the organization they are stewarding.

And I’ll say this: it takes a special BoD to be open to that, and I wish ALL boards were. Studies have shown that many BoDs are not effective. They meet once a month or once a quarter, check their boxes, ask a few interesting questions, then move on. OR, they get so far into the details of the organizations (especially if the Board Members are retired), that they disrupt the flow, blur various lines of accountability, risk sending mixed signals and misaligning priorities, and taking over—usually without fully understanding the business.

But a key point to an effective BoD is their independence from the company. If they are so far into the details of how a company operates—how well do you think they’ll objectively and honestly evaluate whether their work is doing what’s best for the organization? And at what point do they simply become another employee?

Here’s what I wish BoDs would do: just… work well together and focus on the success of the organization. Focus on each other’s strengths and determine what you bring to the organization, then commit to a level of care in that area, and ALWAYS be a Board that is in service to the organization.

Audit the functionality of the board and whether you are providing that service: 

·       Can the CEO talk to you and ask for your advice, opinion, or support? And if they do, will you judge them favorably because they were responsible going to you as a resource, or will you judge them harshly because you think they should know everything?

·       Do you take your ethics and compliance duties seriously enough such that ALL employees know who is on your Audit Committee or Ethics Committee? Do you insist on reserving time during each board meeting to talk about ethics and compliance?

·       Are you known for being the type of team who can handle a crisis? How many of you have EFFECTIVELY handled a crisis already?

·       Is your communication style more weighted on TALKIING or LISTENING? (it should be on the listening side…)

·       Do you care about employee engagement as a key driver of organizational performance, and do you care about hiring, developing, and retaining the best talent? Are you willing to make strategic decisions that support those beliefs?

·       Can you be, act, think, and SERVE independently, with integrity and honesty? Are you willing to report conflicts of interest and recuse yourself when appropriate? 

Your reputation as a BoD has a direct impact on the company’s reputation, and if you REALLY want to do what’s best for your organization, work well together and aim to be the MOST FUNCTIONAL BoD in the world. I assure you—you will be famous for all the right reasons… in a world and at a time when MOST boards of directors, if famous, are famous for all the wrong reasons.

And I cannot stress enough the importance of a functional board able to manage through a crisis situation. They must remain level-headed, maintain perspective, and be wired to seek a remedy that’s best for the organization, not wired to look for blame as if that will fix the problem. There will be a root-cause analysis for that, but when you’re focused on a fix for the organization, the first step is putting out the fire and getting the organization back to a functioning place. So if you have the type of personality that has to find and name blame when things go wrong, you and your style will add to the crisis and do more damage short term AND long term than your inclusion on the Board might be worth.

Yup. I said it. Because I’ve seen it.

Wrap Up & Submitting Your Questions

OK—there it is! Episode 32—just four more to this season, and we’ll get into Season 4, which focuses on a few specifics related to this season’s topics, like: what’s the best way to manage an outsourcing provider? And how do I know when it’s time to bring additional people onto my startup?

So keep the questions coming! Just go to my show’s website, AskChrista.com, that’s Christa with a C-H, where you’ll see my latest episode on the front page in both video AND audio—and I record the audio version separately and specifically for those who prefer the audio production style. You’ll see the “Submit a Question” tab where you can submit YOUR question, and while you’re there, sign up for my weekly Sunday Night newsletter called “More Answers,” where I send out a booster for our community to set you up for the workweek

Once again, thank you. And remember, if you have a business challenge or a workplace issue—Ask Christa!