The Functions of the Management Board


The duties of the management board are determined by an organization’s legal structure and bylaws, and the specific powers the board holds could be outlined in the bylaws as well. Regardless of their exact terms management vs governance they do not hold unlimited power; they give decision-making authority to senior managers (or, in the case of non-profits, to staff). Ultimately the function of the board is to determine if these decisions contribute to satisfactory results for the organization as a whole.

In the case of public companies, directors are legally required to be fiduciaries representing the owners of shares/stocks and ensuring that management doesn’t waste money, destroy assets, or break the law. In a sense, the board has to be able to evaluate the performance of the CEO and make decisions regarding the compensation of the CEO.

A lot of boards also carry out other functions. These could include risk and resilience, sustainability, corporate strategies as well as technology and digitization and corporate strategy. To accomplish this, boards need to be able to take on more responsibility and work harder as they need to keep up with new areas of concern that could arise.

If the board begins to assume management responsibilities in the form of making decisions that can only be taken by a board of directors or by taking over management responsibilities, it may upset a carefully designed structure for high-efficiency organizational success. In fact the structure could even lead to increased turnover among the chief executive officer and other managers as they lose faith in the capacity of the board to control issues when they go off the rails.

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