The Functions of the Management Board
The legal structure of an organization and its bylaws establish the roles and powers of the management board. These specific powers can also be outlined in the bylaws. In spite of the specific terms, most boards do not have unlimited power. They give decision-making authority to senior managers (or, in the case of non-profits staff). The primary function of the board is to decide if these decisions result in an acceptable performance for the business as an entire.
In the case of public companies, the board of directors is legally required to act as fiduciaries to represent owners of shares/stock as well as to ensure that management is not making a mistake, destroying assets, or violating the law. In a sense the board must be in a position to evaluate the performance of the CEO and make a decision regarding his or her compensation.
Many boards also perform other duties. These might include risk and resilience management, sustainability, corporate strategy as well as technology and digitization. In order to do this, boards should be able to assume more responsibility and be more productive, in order to keep up with any new issues that may arise.
If the board starts to assume management duties whether through making decisions that could only be taken by a board of directors or by assuming management responsibilities, then it may upset a carefully designed structure for high-efficiency success of the organization. This structure could cause a higher turnover of managers and CEOs since they lose faith in the board’s ability to handle things when things fail.
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