The Functions of the Management Board

The functions of the management board are defined by the legal structure of the organization and bylaws, and the specific powers that the board is granted may be set out in the bylaws also. Whatever their specific terms however, the majority of boards don’t have unlimited power. They give decision-making authority to senior managers (or, in the case of non-profits, staff). The ultimate goal of the board is to determine if these decisions result in satisfactory performance for the organization as in its entirety.

In the case of large public companies directors are legally required to act as fiduciaries, representing shareholders of shares/stocks and ensuring that management does not spend money, deplete assets, or violate the law. In a sense, the board must be able to evaluate the CEO’s performance and make a decision regarding his or her compensation.

A lot of boards are involved in many other areas as well. They may be involved in the management of resilience and risk, sustainability, corporate strategy, and technology and digitization. In order to achieve this, boards must be able take on more responsibilities and be more active to be able to handle any new issues that might arise.

However when the board begins to take on the responsibilities of management by taking decisions that should only be made by the entire board, or by taking on the management responsibilities, it is at risk of disrupting a structure that was carefully designed to maximize efficiency and organizational success. In fact this type of structure could even lead to increased turnover among the chief executive officer and other managers as they lose faith in the abilities of the board to manage things when they go awry.

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