The Board of Directors and the Board of Management
A board of directors is an organization that is responsible for an entity regardless of whether it is publicly traded (public company), privately owned or only open to family members (family company), or tax-exempt (a non-profit corporation). The powers, duties, and duties of the board are heavily governed by the regulations of the government as well as the constitution and by-laws of the organisation.
Most presidents and external directors believe that the role of a board is advisory, not a decision maker. Management runs the business, and the board provides advice and guidance to management. Outside directors are chosen for their expertise in certain areas of business, and also to offer a perspective on the larger picture that management might not have. Many presidents are aware of the importance of the suggestions offered by their boards, both inside and outside of formal meetings. They carefully select new directors according to their desired skills and areas of expertise.
A fundamental purpose of a board is to question management, particularly when there are major problems with the company or the economy. My research has revealed that the majority of presidents say they encourage directors to ask thoughtful questions, they don’t allow the questions to be raised at regular board meetings. This is particularly true if they feel they are being attacked by their subordinates who are present at the meeting.
