Traditionally, boards establish targets and approaches for their businesses, decide upon significant policies and review and approve financial statements. In addition, they appoint mature management make compensation rates, and they occasionally set up committees that focus on specific functions just like auditing, personnel and reimbursement, or mergers and purchases. They also determine the amount and timing of dividends to shareholders. Table members are supposed to be self-sufficient and have zero material ties to the organization. A family member of a top executive or a person with substantial organization dealings with the company can be considered to have got material ties and thus not qualify like a board affiliate.

Most presidents profess that they want directors to query their choices, plans and operations, although I have found that this is a lie. Presidents do not want to be challenged with discriminating questions in public, and they will often make the uninformed director feel that they have not been granted a sufficient amount of leeway in board appointments.

Occasionally, the advice of a wise plank member should lead to a reconsideration or modification of any management determination or decision. But that is not very often. Generally, directors do not need the guru to invert any of these decisions except in very rare situations. Most importantly, a director must be capable of weighing the interests with the shareholders and other stakeholders against the goals and needs of the enterprise. Otherwise, the board’s role has to be mere custom that does not ensure that the company.