The paper "Corporate Boards that Create Value" is a wonderful example of a Management Assignment. Many people imagine the board of directors as smartly dressed men and women, who normally sit in posh offices always smiling in their dollar suits. This picture arises from annual company reports that feature such photographs. However, remarkably few people have the slightest idea of the responsibilities of the governing body. This report critically analyzes the responsibility, purpose, authority, and functioning of the governing board. The governing board consists of elected or appointed persons mandated with the running of an organization or company.
There are many names, which refer to the governing board such as the board of managers, directors, regents, trustees, visitors or in some cases just the board. Activities of a board depend on its powers/authority, responsibilities and duties given to it by the conferring authority (Richie 2007). The mandate of the board appears in the companies or organizations bylaws. These bylaws form the foundation of the board, its composition, mode of selection, time of selection and specify the time for meetings.
The board is subordinate to the full members’ council or the shareholders of a company. In any organization, the board constitutes the highest power in organization management. In institutions such as schools or colleges, the board is the highest governing body and its members mostly choose the board (Robert et al 2000). The basic duties of a governing board include governing the company. The board achieves this role by laying down policies, objectives, and visions of the organization. Secondly, the board selects, appoints support and reviews the conduct and function of the chief executive officer (CEO).
Thirdly, the board ensures the organization has enough financial resources to operate. Fourthly, the board supervises and approves the organization’ s annual budget. The board is also liable to the stakeholders for the performance of the organization (Carter 2008). Further, the board evaluates and pays dividends, split shares, approve financial statements and recommend or discourage mergers or acquisitions. In addition, the board sets the remunerations, salaries, and wages of the employees and management. Legally, the responsibilities and duties of the governing board differ with the environment of an organization and the jurisdiction of operation (Carter 2007).
The primary responsibility of the board is to ensure proper returns on shareholders’ equity. However, in the current global market, many directors consider the protection of employees as their first priority. In such a situation, employee care comes first while the profitability and needs of shareholders come second (Kennon 2013). Structure of the governing board The board consists of directors elected by shareholders for the specified year terms. Many organizations operate on a rotating system which ensures only a few directors can be reelected in any given period.
This ensures competency and accountability and reduces the chances of a complete hostile takeover through a change in the board. Most directors have an interest in the organization, work in the upper management of the organization, or operate independently from the organization, but the organization recognizes them for their business skills (Kennon 2013). Various organizations have a different number of directors. Some companies have more than ten directors such as Walt Disney that have sixteen, elected for a one-year term. Others may have less than ten directors such as Tiffany’ s with only eight directors.
In the USA, half of the directors must be independent. Therefore, they should have no association with the directors or the stakeholders of the organization (Solomon 2011).
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