The legal structure of an organization and its bylaws define the duties and powers of the management board. The specific powers of the board may also be outlined in the bylaws. Most boards regardless of their specific wording, do not have unlimited power. They delegate decision making to senior managers or in the case of non-profits and staff. The main function of the board is to determine if the organization’s performance as a whole is satisfactory.
In the case of large public companies, the board is legally obliged to act as fiduciaries and represent the shareholders of shares, ensuring that management is not spending money, destroying assets, or breaking the law. In a sense the board must be able to evaluate the CEO’s performance and decide on his or her compensation.
A lot of boards are involved in many other areas as well. These might include the management of resilience and risk, sustainability, corporate strategy as well as he has a good point technology and digitization. In order to do this, boards must be able to take on more responsibility and be more productive, as they need to keep up with new areas of concern that may arise.
If the board begins to assume management duties or by making decisions that can only be made by a full board or by taking on management responsibilities, then it may upset the carefully planned structure designed for efficiency-based success of an organization. This structure could cause a greater turnover of CEOs and managers as they lose faith in the board’s ability to handle issues when they get wrong.