The Functions of the Management Board

The legal structure of an organisation and its bylaws define the responsibilities and powers of the management board. These specific powers could be specified in the bylaws. The majority of boards, regardless of their exact wording, do not have unlimited power. They delegate decision making to senior managers, or in the case of non-profits, staff. The main function of a board is to decide if these decisions contribute to satisfactory results for the organization as a whole.

In the case of large public companies the board of directors is legally required to act as fiduciaries to represent the shareholders of shares, ensuring that management isn’t making a mistake, destroying assets, or infringing on the law. In a sense, the board should be able to assess the performance of the CEO and make a decision regarding his or her compensation.

A lot of boards are involved in several other tasks as well. This could include the management of resilience and risk sustainability, corporate strategy as well as technology and digitalization. In order to do this, boards must be able take on more responsibility and do more, as they need to keep up with the new areas of concern that might arise.

If the board decides to assume management duties or by making decisions that could only be taken by a board of directors or by taking on management responsibilities, it could disrupt the carefully planned structure that is designed for high-efficiency organizational success. This could cause a greater turnover of managers and CEOs because they lose confidence in the board’s ability in handling things when they get wrong.