Posted by Chester Morton / Monday 15 May 2017 / No comments
The functions of the Board of Directors of a company
THE FUNCTIONS OF THE
BOARD OF DIRECTORS OF A COMPANY
Definition of a Board of Directors
A Board of Directors can be defined as a body of people who
are mandated to supervise the activities of a company. The members of the Board
of Directors may either be elected or appointed. The Board is chaired by one of
its members, elected by the very members themselves.
THE FUNCTIONS OF THE
BOARD OF DIRECTORS
Institution of a code of conduct
One of the functions of the Board of Directors is to put in
place a Code of Conduct, to which, board members themselves, senior managers
and other employees must adhere. In order to be fair to every member of the
company, the Code of Conduct must be widely circulated within the company so
that everybody becomes aware of, especially, the policies and procedures to
follow under any prescribed circumstance.
Grievance management
Another function of the Board of Directors is to establish a
grievance management system. This way, grievances can be easily identified and
quickly addressed. In every company, there are bound to be misunderstandings
among workers and between workers and Management, especially concerning company
policies and procedures. There must be laid procedures for bringing these
grievances to the attention of management and for them to be addresses.
Vision and Mission Statement
It is the function of the Board of Directors to prepare a
vision and mission statement for the company. The intention is to provide a
clear direction that fits into the corporate strategy of the company. Every
action or inaction of the company must have these vision and mission statement in
mind.
Internal Control
The Board functions to put internal mechanisms in place to
control the activities of the workers of the company, at all levels. This is
rightly so because the Board only gives broad directives, they do not
unnecessarily interfere in the day-to-day running of the company. This being
so, there must be ways of controlling what exactly happens in the day-to-day
activities of the company. This is where the internal control mechanisms come
into play.
Annual Evaluation
It is also the duty of the Board of Directors to establish
mechanisms by which their own performance can be evaluated annually. In other
words, since the Board seem to be above everybody within the company and it may
be almost impossible to question their actions, there must be a way of holding
them accountable for the decisions they take. It is, therefore mandated to
institute ways by which the board can be evaluated.
Determination of company priorities
It is the duty of the Board to determine what is important
or otherwise to the company. In doing this, the board takes into consideration,
the current circumstance of the company and any recommendations of the any
technical committee established for that purpose.
SAMPLE QUESTION(S)
1. Outline six functions of a Board of Directors
2. Advance six reasons for establishment of a Board of
Directors
