Question

How does the composition of the board of directors affect the the strategic decision making?

Answer 1

Board of Directors is at the best possible level when it involves authority within the company. it's consisted of these people that work on the best possible level and act as a representative of the interest of the shareholders. They make sure that the call made by the Chief Execution Officer is for the benefit of anyone who is connected to the company. For nonprofit organizations, the role of the board of directors is to serve the interests of the general public and thus the organization. Boards of directors are considered a valuable source of data and expertise which is ready to contribute to strategic decision-making actively initiating, implementing and evaluating strategic decisionsBoards of directors of giant corporations provide governance safeguard to both equity capital and managerial employment contracts. Thus, the board could even be a potentially important instrument of control.

Board of directors affects the choice making in an organization in different ways. Board is at a tier where they need influence over the remainder of the organization so their decision affects the organization deciding. The following are the ways by which the board of directors affects the choice making of an organization.

Expertise
The Board of directors brings knowledge and expertise to them. Board is elected because of the skill they possess. Board members participating in meetings, giving their input helps in strategic deciding of a corporation.

Financial Guidance
Board of Directors has influence over the financial aspect of a corporation. BOD members must ensure that the financial disclosures are accurate and truly represent the state of the company.

Fiscal Accountability
An organization must decide what to undertake and do with the profit, what quantity to reinvest within the corporate and also the way much to line as a dividend. The BOD is fiscally on top of things of the company. It sets the number of dividends paid to the shareholders and also the way much profit is reinvested into the company.

Management of Company Risks
Board of Directors while ensuring the interest of the shareholders is taken care of they even have an infinite role to play in the management of company risks. BOD frequently weighs up a company's risk of missing the corporate objectives and also the implications that this might wear dividend distribution or the financial return to the company. The Board will usually task the CEO to style a portfolio of risk-mitigation strategic decisions that the company might pursue, and also the BOD will review these and ensure the business isn't taking unnecessary risks.

Reviewing the projects and objectives
Board encompasses a giant role to play in reviewing the projects, objectives decided by the CEO. The role of the board of directors in corporate governance is to review the programs selected by the CEO that is presumably to comprehend the financial objectives set for the company. This includes the spending required for the job and also the investment decision made by the team.

In a company, the board of directors does lots of tasks to help the business to work efficiently and achieve its objectives. While the number of roles that the board fulfills differs but there are generally two roles that directors do.

1. Monitoring Role
2. Service Role

Monitoring Role
In this role, the board is to blame for keeping informed and engaged with the firm to assure that the interests of the firm’s stakeholders, and particularly its owners, are protected. It means the role of overseeing the execution of previously decided way of doing a process. Similarly, the BOD makes sure that the objectives of the firm are realized and provide the best management.
team’s decision-making with the intention to surveil whether these decisions are often expected to attain success to satisfy the firm’s goals and aspirations.

Service Role
The second, and much less investigated role, is that the board’s service role. In this role, the board has obligation to involve directly for making major strategic decisions, like in times of crisis or when confronted with CEO succession decisions or it's visiting tackle a more indirect role for advising and counseling the best management team in its strategic deliberations. Whereas
monitoring means the ways of control and tends to constrain the firm’s management, the service role is about support and aims at strengthening strategic decision-making – a fragile balance with which each board must wrestle.

Conclusion
Now we can see that board of directors play a huge role in strategic decision making of the organization, whether we are talking about the interest of the shareholders or providing their expertise in deciding the objectives of the business or allocation of profit in dividend or reinvesting business. Board of Directors have a huge influence over the business and their decisions could very much affect the successful long time run of the business.