The legal structure of an organization as well as its bylaws establish the roles and powers of the management board. These herbboardroom.com/the-difference-between-governance-and-management/ specific powers may be described in bylaws. Most boards regardless of their exact form, do not possess unlimited power. They delegate decision making to senior managers or for non-profit organizations, staff. The board’s ultimate function is to determine if the organization’s performance as a whole is satisfactory.
In the case for large public companies, directors are legally required to serve as fiduciaries, representing shareholders of shares/stocks and ensuring that the management does not make a mistake, squander assets, or violate the law. In a way the board must be able evaluate the CEO’s performance and take decisions regarding his or her compensation.
A lot of boards are involved in a number of other functions as well. These include resilience and risk sustainability, corporate strategies as well as technology and digitization and corporate strategy. To do this, boards need to be able to handle more responsibility and work harder in order to keep up with any new issues that arise.
However when the board begins to take on the responsibilities of management by making decisions that are only made by the entire board, or by taking on the management responsibilities, it is at risk of upset a system that was specifically designed to ensure high-efficiency organization success. In fact this kind of structure could even lead to increased turnover among the executives and other managers because they lose faith in the capability of the board to manage things when things go wrong.