The best board members are those who listen first to understand before making themselves understood.
An important principle under the corporation laws of all 50 states is that the governing board is the highest authority for making decisions about matters important to the operations of the corporation: policy, direction, strategy and governance. Accordingly, being able to make decisions is an important skill or trait for a board member.
An equally important principle is that the governing board is the highest authority to provide for oversight of matters critical to the health of the corporation: Accuracy of financial statements, reasonableness of compensation and appropriateness of succession planning. Accordingly, being able to understand these critical matters is an important skill or trait for a board member.
Another equally important principle is that boards make decisions and provide for oversight by majority vote at a meeting at which a quorum is present. Accordingly, being able to build consensus is an important skill or trait for a board member.
However, in making decisions or providing oversight, directors are entitled (and expected) under state corporation law to rely upon:
- Officers or employees as to matters for which the director reasonably believes they are reliable and competent
- Professionals such as lawyers or accountants as to matters that the director reasonably believes are within the person’s professional competence
- Duly established committees of board as to matters within its designated authority, which committee the director reasonably believes to merit confidence.
The right of reliance requires listening and questioning: Listening to what the officers or employees, professionals, or committees are providing; and then asking questions so that the director can form a reasonable belief about reliability, competence or designated authority. But listening must come first.