What Does a Director of a Corporation Do? (With Skills)

By Indeed Editorial Team

Published January 3, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

The smooth running of a corporation requires a director to oversee its operation. The internal policies of a corporation typically outline the role of a director. Knowing the duties of directors can help you understand how to perform in this position effectively or what to expect from these roles at work. In this article, we discuss what a director of a corporation does and explore the skills required to become one.

What does a director of a corporation do?

Answering the question "What does a director of a corporation do?" can help you know how they govern corporations. Corporate directors integrate a group called the board of directors. The primary role of a director is to make decisions and supervise the activities and affairs of the corporation. Here are some of their responsibilities:

Managing the affairs of the corporation

A director makes several decisions, such as hiring senior executives and retaining employees, establishing profitability standards for investment activities, or managing and monitoring mergers and acquisitions. They implement new policies and set goals to improve the corporation. They also approve annual reports and attend board meetings. To ensure proper management of the corporation, directors often appoint the chief executive officer (CEO), chief operating officer (COO), and managers. A director maintains an open dialogue with stakeholders to get success. These professionals research marketing strategies to promote a corporation's products or services and increase sales.

They can ensure every employee works to achieve the corporation's goals by creating a positive and diverse working environment. To become a successful director of a corporation, it's essential you effectively advance a business's strategic goals.

Performing fiduciary duties

Directors owe the shareholders and owners of a corporation fiduciary duty. Fiduciary duty is the commitment to act in a manner that can benefit another person or entity financially. These professionals protect the assets of shareholders by ensuring that they make an excellent return on their investments (ROI). They discharge their duties in an honest, loyal, and proper way. This means that directors are reasonable and fair when dealing with shareholders. Directors can also ensure that they secure the assets and finances of the corporation.

Because directors work for the corporation, it's essential they oversee its capital, profits, and liabilities. Directors also vote for dividends and stock purchases. They can develop and enforce the financial policies and procedures of the company.

Related: What Is a Board of Directors? The Definitions and Functions

Creating a policy system

Directors have direct control over the corporation. They implement policies according to labour legislation and health guidelines to promote the wellness of employees. They're often responsible for creating the corporation's mission and vision. For example, the board may determine corporate policies regarding product quality, salaries, and services. Directors also develop a corporate hierarchy to organize employees into distinct levels. This typically enables the corporation to have streamlined communication and training.

Owing a duty of care to the corporation

According to the Canada Business Corporation Act, corporate directors of public or private companies owe a duty of care to the corporation. It's crucial that directors abide by a particular standard of care. The duty of care requires that corporate directors exercise skills, due diligence, and care when performing their duty. This means they're to attend the board meetings and offer contributions that can promote the business.

It's important for a director to be proactive and have enough information about the corporation's affairs. These professionals know how to articulate effectively the corporation's good work and can provide solutions to stakeholders during a crisis.

Building a positive brand image

Brand reputation is an essential factor in a corporation's functioning. Because directors serve as a link between the employees and its shareholders, it's crucial they share the corporation's accomplishments, missions, and goals with the stakeholders. The board of directors also works with the public relations department to build a positive brand image. This usually helps them to pass the corporation's news and key message using trade publications, online blogs, and news outlets. They can also identify the corporation's target audience to ensure effective marketing. Directors may promote the brand on a wide scale through social media, paid marketing, and emails.

Hiring, supervising, evaluating, and retaining the chief executive officer

One of the most important responsibilities of a director is hiring, supervising, and retaining a qualified candidate that can serve as the chief executive officer (CEO). They're objective when searching for an individual that has the necessary skills, strengths, and abilities to help the corporation fulfill and advance its goals. Directors typically perform self-evaluation programs to improve the CEO's performance.

Related: 15 Recruiting Tools That Make the Hiring Process Easier

Ensuring ethical integrity and legal compliance

It's important that every corporation abides by rules and laws. A director can face liability under several environmental legislations. They're responsible for preventing pollution offences by the corporation. For instance, if a corporation deals in oil and gas, directors usually notify the Ministry of the Environment, Conservation, and Parks of their discharge of contaminants. It's also essential they monitor the depositing and managing of certain wastes by the corporation.

Avoiding conflict of interest

It's a director's responsibility to avoid a conflict of interest within the corporation. A conflict of interest occurs when directors make decisions to benefit their interests in other agreements. It's vital that a director acts under the company's constitution to exercise an independent judgement. To avoid conflict of interest, the Corporate Governance Act requires that they disclose any personal interest they have in a proposed or existing contract with the corporation. This Act also provides that they declare the nature of their interest at a meeting with the board.

Managing the resources appropriately

Because the corporate board of directors is accountable to the shareholders, it's important they manage the corporation's assets responsibly. The board of directors typically ensures that the corporation has well-managed and adequate resources at its disposal. Their primary goal includes assessing the opportunities that can drive performance in the market.

What skills does the director of a corporation need?

Effective corporate directors have several skills that can help them make strategic decisions that may improve business performance. The following are the essential skills required to become a director of a corporation:

Leadership

Because directors manage teams and departments, it's important they demonstrate effective leadership skills towards employees. As a corporate director, it's crucial you know how to delegate duties and provide guidance to ensure that the corporation achieves its goals. These professionals typically build and maintain a strong working relationship with employees to enable them to advance their careers. Directors use this skill to oversee operations, guide initiatives, and properly allocate resources.

Related: The Importance of Leadership (With Essential Skills)

Communication

As a director, one of your responsibilities can be to oversee multiple employees and projects, so it's crucial you know how to communicate the corporation's goals clearly. This skill involves active listening and asking questions. Directors can also consider their audience, what information they want to share, and the best medium to use. For instance, if you want to explain a complex idea to employees or shareholders, it's crucial you share it in person or via video conference. Effective communication can enable you to receive feedback that may provide immediate solutions to problems.

Commercial acumen

Because a director improves the corporation's growth, it's vital they ensure that the business's revenues increase or remain stable. They can also have quickness and keenness in managing a problem that may likely result in a good outcome. Having commercial acumen requires that you know how to recognize several strategies, opportunities, or actions that can impact the corporation's cash flow and profitability. With this skill, you can easily enter trends to streamline performance, outperform competition, and grow the corporation's market share.

Commercial acumen often depends on your industry. For instance, if you're a finance professional, it's important you know to read and analyze financial statements.

Analytical

Analytical skills enable you to gather data, solve complex problems, and make rational decisions. As a director, you may face several management issues, so it's important you can analyze and develop solutions. Directors typically gain this skill by experiencing complex corporate situations, sharing opinions with colleagues, reading books, playing brain games, and practicing problem-solving questions. For example, you can play games like chess, to know how to develop solutions to a problem quickly.

Negotiation

Directors often convince a corporation's shareholders to compromise on their position and make concessions. This skill also enables them to persuade shareholders to cooperate and make decisions that may benefit the corporation. Having this skill can help you explain why your opposed solution is beneficial to all individuals and encourage others to support your view. Aspiring directors can improve their negotiation skills through confidence-boosting training. To be a successful negotiator, it's essential you effectively communicate your goals and understand the needs of the other party.

Related: Top Negotiation Skills You Should Possess

Management

Having excellent management skills makes it easier for directors to use the corporation's resources and achieve its business goals. This skill is essential in ensuring that all the parts of a corporation function cohesively. Management skills include the ability to avoid crisis situations and promptly solve problems. It often helps directors to relate with other employees. If you foster superb management skills, you can propel the company's vision and mission using external and internal sources.

Please note that none of the companies mentioned in this article are affiliated with Indeed.

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