How governing bodies influence strategy

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Boards of directors

A common issue increasingly debated is the role of boards of directors and of direktors themselves. Since boards have the ultimate responsibility for the succes or failure of an organisation as well as the benefits received by shareholders or wider stakeholders, they must be conserned with strategy. However, there are two broad choises on how they do this.

Delegate to management

Strategic management can be enturely delegated to management – with the board receiving and approving plans and decisions. Here the stewardship role of the board requires processes that ensure that the purpose of the organisation and its strategies are not captures by management at the expence of other stakeholders.

Engage with management

The board can engage with management in the strategic management process. But this has many practical problems concerning the time knowledge level of non-executive directors to preform their role this way

The problem

This problem can be especially pronounced in organisations such as charities or public bodies with governing board or trustees of people committed to the mission of the organisation, keen to become involved but with limmited operationel understanding of it.

Written by admin

september 20th, 2008 at 7:41 pm

Posted in economics

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