Directors vs senior management
Directors are concerned with the big-picture and use a ‘helicopter focus’, which involves steering the organisation towards its goals and ensuring the day-to-day management of the organisation is consistently aligned with the overall organisation’s vision.
It is important to note that directors DO NOT replace the management team. In fact, there is a very important distinction to be made between them. Directors supervise and complement the role of the management team by offering long-term planning, financial oversight, and inside knowledge. In contrast, the management team is concerned with the operational running of the business. Although management and directors have very different roles, effective organisations ensure that there is a strong relationship between board and management.
The role of the director is to:
- consider the strategic vision for the company
- offer fresh thinking and additional skills and knowledge
- have extensive networks to help the company grow
- act in good faith and in the best interests of the company
- have no conflicts of interest with the company
- ensure that the company remains solvent
- not take advantage of their position as a director for personal profit (ie insider trading).
The value of directors comes to bear at meetings – a good board will try to debate an issue from every angle before coming to a decision. A director should be prepared, informed, and ready to debate and think about the strategic future. Some directors will have general skills, while others more specific, either way, they will add value to the company with a fresh perspective.
What skills do directors have?
Experience: directors bring with them years of experience which can be readily tapped into.
Networks: directors develop networks to promote the organisation further, and to gain knowledge for the business itself.
Fresh perspective: directors provide a new set of eyes on the current and future endeavours of the organisation.
Long-term view: directors typically commit themselves to an organisation for at least three years (and often stay much longer) providing them with the ability to develop a strong knowledge of the business and provide continuity.
Conformance: directors monitor the performance of management in terms of running the company in the interest of the shareholders, community, and government in accordance with the law.
Performance: directors set objectives and oversee the work of management to ensure it delivers against the vision laid out in the business plan.
- encourage accountability and transparency
- manage and reduce risk
- contribute diverse views in order to make the best decision for the organisation.
NB: Companies and not-for-profits are required by law to have at least one director.
If you are an SME-owner/operator thinking about setting up a board for your company, you will find other useful information at FirstBoards.