The management board is responsible for a range of tasks, including establishing the strategy, managing finances, building relationships with the local community, and establishing ethical standards. Boards select and oversee the CEO; they create the vision, mission, and strategic directions; they develop relationships with the community; they establish management practices in governance, quality and compliance lastly, they deal with the need for organizational change due to changes in circumstances and regulatory pressures.
Boards are legally liable as fiduciaries, whose job is to represent shareholders and investors. They decide on policies for dividends and payouts, as well as hire/fire and reward management. They also establish corporate rules. They also ensure a constant communication with management and are the representative of the company. The chair of the board, often elected from the board membership and is a leader for the entire board. They are usually non-executive directors (NEDs) who serve as the intermediary between the chief executive officer and the board.
The biggest function of the board is to act as a steward for the organization. However there are some boards that are prone to becoming management, trying to do things by themselves instead of ensuring that activities are in conformity with the organization’s commitment to its mission. Boards must keep in mind their oversight role and their responsibility to ensure organizational success. This can be done most effectively by using committees. For instance, audit, compensation, and nominations committees have become popular ways of examining complicated issues. The committees are able to present their findings to the entire board.