The management board is responsible for a range of tasks, including establishing strategy, managing finances, developing relationships with the community and setting ethical standards. Boards select and monitor the CEO; they formulate an overall vision, mission and strategic directions; they develop relationships with the community; they set management practices in governance, quality, and compliance; and, finally, they address the need for organizational change due to changing conditions and regulatory pressures.
Boards are legally accountable as fiduciaries, whose job is to represent shareholders and investors. They make corporate rules, formulate guidelines for dividend payouts and compensation, and make decisions on hiring or firing the top management. They also maintain strong communications with management and represent them to the organization. The chair of the board, typically elected from the membership of the board is the leader of the entire board. They are often non-executive directors (NEDs) who serve as the intermediary between the chief executive officer and the board.
The primary role of the board is to function as a steward for the organization. Some boards, however, cross the line and attempt to run the company themselves instead of ensuring the activities are in line with the organization’s mission. Boards must balance their oversight role with their responsibility to ensure organizational success. This can be accomplished effectively by using committees. Audit or compensation and nominating committees, as an example, are now popular methods to look at complicated issues. These committees report back to the board in general on their findings.