The board directors of a company are constituted by members who are appointed by a higher authority of the organization so as to oversee the functions of the company. Hence, they play a stewardship role for the company owners to ensure that their desired objectives are achieved. Thus, the board directors play a very vital role in the organization especially in the absence of the company shareholders. However, the roles and responsibilities of the board directors are decided upon by the appointing authority but their function is purely a delegation for the owners of the organization. In the majority of companies, the board directors are the top most personnel in the organizational structure. The diverse responsibilities and duties of the board directors are described in detail below.
Firstly, the board directors perform a recruiting and appointing function in the organization. It is the role of the board directors to select and recruit the executive management personnel which includes; the chief executive officer or the managing director. The directors ascertain that individuals who hold the executive positions are competent and have the desirable leadership qualities to ensure the company would be run smoothly. However, in some organizations the board directors are accorded with an appointing authority of the executive personnel (Bruce, 2010). The executive management is of utmost importance for the organization since it is responsible for overseeing the daily functions of the business and also plays a duty of recruiting the other majority employees. The board directors also determine the compensation policy for the executive management of the company. Consequently, they undertake the decisions of evaluation and retention of the executive personnel. The directors also conduct performance evaluation of the chief executive officers of the company and this follows a predetermined criterion that is determined by the board directors.
Secondly, the board directors are also given the mandate of offering direction for the organization. In this regard, board directors have the duty to formulate policies which govern the human resource management of the company. These policies adopted by the board are necessary for directing the daily activities undertaken by the company workforce. However, these policies drafted by the board of directors are further implemented by the chief executive officer of the particular organization. Furthermore, the board directors also provide strategic direction to the organization by helping in the development of the mission, vision and goals of the organization (United States, 2002). Thirdly, the board directors also perform the duty of establishing a strategy based governance system for the organization. The board manipulates the articles of governance so as to develop proper strategies for the organization.
Hence, this function portrays the board directors as a body that is tasked with the formulation of rules that govern the function of the organization. These rules are formed under the underlying basis of strategy for the company. Hence, these rules are focused on controlling the actions of the board directors as well as, those of the company managers. The policies developed by the board are set to encompass a broad scope so as to give opportunity for the management to formulate strategies of accomplishing the organizational goals and objectives. Fourthly, the board directors play a fiduciary role in safeguarding the shareholder’s investments and the organizational assets (Jennings, 2000). The board directors are accorded a fundamental right to represent the shareholder’s interest and also to protect their investments in the company. Hence, the board of directors has the responsibility of ensuring that the company assets which include; plant and machinery are kept in good condition.
Consequently, the company employees also form part of the company assets which is protected by the board directors. The board of directors also has the role of reviewing the company’s financial reports and records as a way of protecting the money of shareholders. This role is performed based on utmost honesty between the board directors and the company shareholders. Hence, it is the duty of the directors to point out any errors that might arise in the financial records and ensure that such problems are fixed in the best interest of the company shareholders. The board must also carry out a review of the fiscal situation of the business so as to assure the shareholders that the company is able to have a going concern.
Lastly, the board of directors carries out a vital role of monitoring and control of the organizational functions. In regard of this, the board directors are expected to undertake periodic reviews of the organizations compliance to the set vision and mission. This involves taking a directed scrutiny on the activities of the company and then relating them with the organization’s mission and objectives. As a result, the board directors are allowed to sign up a self-sufficient auditor to examine the company’s operations and ensure that they are in compliance with the desirable standards (Roche, 2009). The auditor reports the company findings directly to the board directors and also points out any anomalies that might exist in the organization. Consequently, the board incorporates these recommendations in their strategy development to ensure that the company would efficiently achieve its goals and objectives.
References
Bruce, M. (2010). Rights and duties of directors. Haywards Heath, West Sussex: Bloomsbury Professional.
Jennings, M. (2000). The board of directors: 25 keys to corporate governance. New York: Lebhar-Friedman Books.
Roche, O. P. (2009). Corporate governance and organization life cycle: The changing role and composition of the board of directors. Amherst, NY: Cambria Press.
United States. (2002). The role of the Board of Directors in Enron's collapse: Report. Washington: U.S. G.P.O.
