The Functions of the Management Board

The management board has many functions, such as establishing strategy, managing finances building relationships with the local community, and establishing ethical standards. Boards choose a CEO and monitor their progress; they decide the direction of an organization through the development of goals, vision and strategic goals; develop relationships with the community and establish management procedures for quality, governance and compliance; and deal with organizational changes that are triggered because of changing circumstances or regulatory pressures.

Boards are legally responsible as fiduciaries, whose job is to represent shareholders and investors. They set the rules for dividends and payouts, hire/fire and compensate management as well as make corporate rules. They also maintain a clear communication with management and are the representative of the company. The Chair of the Board, usually elected by the board members is the leader of the entire board. They are usually non-executive directors (NEDs) who serve as the link between the chief executive officer and the board.

The main role of the board is to serve as an administrator of the organization. Some boards, however, cross the line and try to run the organization themselves, rather than ensuring that their actions are in line with the purpose of the organization. Boards should focus on balancing their oversight role with their responsibility for organizational success. This can be accomplished most efficiently by utilizing committees. For instance, audit, compensation, and nominations committees have become popular methods of looking at complex issues. These committees report their findings to the entire board.

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