Terminology for First-Time Board Members
Must-know board vocabulary before your first board meeting.
By: Catherine Maher
By: Catherine Maher
The use of board terminology will help facilitate projects and governance in addition to streamlining communication within an organization. Board members can complete more tasks effectively and feel empowered in their work when they have a complete and thorough understanding of board vocabulary.
Listed below are some key board terms that will enhance the lexicon of any board member.
A governing body of an organization tasked with ultimate decision-making power. The board is held liable for the actions, policies, and procedures of the organization. Members of the board usually include senior executives and experts within the field of the organization’s purpose.
Every public company is legally required to install a board of directors; nonprofit organizations and many private companies – while not required to – also name a board of directors.
A short, comprehensive sentiment that outlines the purpose of an organization—why it exists, its reason for being.
This statement directs all decisions by the board.
Attention to mission helps the board adhere to its primary purpose and helps during conflicts by serving as a touchstone for every decision. The mission statement can be used as a tool for resource allocation. A powerful mission statement attracts donors, volunteers, and community involvement.
Learn how to write a mission statement.
A process of organizational financial review that assures proper policies are in place and being implemented. This guarantees that the board’s financial records are representing an accurate overview of the organization’s transactions.
The audit committee, a major operating committees of a company’s board of directors, works closely with auditors to ensure that company’s books are correct and that no conflicts of interest exist between auditors or any outside consulting firms employed by the company.
According Investopedia, an audit committee is made of members of a company’s board of directors and oversees its financial statements and reporting. Per regulation, the audit committee must include outside board members as well as those well-versed in finance or accounting in order to produce honest and accurate reports.
A situation in which a transaction or arrangement might benefit the private interests of an officer, board member, or employee. A personal or financial interest should not compromise a Board Member’s independence of judgment in exercising their responsibilities.
Directors need to disclose ethical, legal, financial, and other conflicts, and remove themselves from decision-making if they would otherwise be called on to act on a conflict involving themselves, their family members or entities with which they or their family members are closely associated.
Does your organization have a policy governing conflicts of interests?
A conflicts of interest policy, as well as all board policies, should be available for any board and/or staff to review regularly.
Where are your board policies located? Board portals are excellent for securely storing all board policies making them easily accessible to all board members.
Did you know that Board Director’s Board Book Builder allows administrators to add conflicts of interest to any meeting agenda.
Highest officer within a board of directors. The Board Chair is usually an elected position that is tasked with presiding over meetings. This person also serves as the liaison between the CEO and the board. The community also looks to the Board Chair as the spokesperson of the organization.
Minimum number of voting members that must be present for a board to conduct business. State laws often set boundaries on quorum size. Board bylaws will specifically outline the necessary size.
A tangible list of tasks and topics to be covered that are addressed during a board meeting. The agenda is usually distributed days or weeks prior to a board meeting to allow members sufficient time to review and prepare for the topics. Board Director’s Meeting Agenda can help your board build an effective and secure agenda.
“The beautiful thing about learning is nobody can take it away from you.” ~ B. B. King
We hope that you can apply this knowledge to any related field that may be related to a board of directors. Board Director’s Board Portal is ready whenever to assist you in giving the tools you need for your board to succeed.
Exceptional board of directors use board portal software rather than email. 📧
Their mission and vision statements, along with all other board documents, are securely stored and available to them.
👉 Sign up for a 21-day FREE Trial 😄