Question

Should profits be the fiduciary responsibility for boards? Why or why not?

Answer 1

Within a company, the CEO, CFO, Board of Directors, managers, and administrators are executives with fiduciary responsibilities towards others. Fiduciary responsibility is a legal obligation in which executives must be trustworthy, compassionate, loyal, and show good faith. They control and maintain the assets safely and effectively. They are responsible for properties. Instead of increasing one's own wealth, management must concentrate on the overall organizational interest.

No incident may happen that the system is abused in direct or indirect ways to achieve a personal benefit. Managers need to comply with the existing standards and demonstrate a high degree of professionalism and thoroughness in their roles. In short, fiduciary responsibilities include aspects such as care, loyalty, trustworthiness, fair dealing, good faith, confidence, public accountability, and transparency.

In employment policy, the fixed wages, entitlements, and income sharing must be clearly differentiated. The 'pay for achievement' approach needs to be implemented in order to improve rewards for better output by the company and the employee. Not only should financial incentives form part of the program, but it must also be able to influence such actions. Growth and reasonable taking of risks must be rewarded to ensure the success of an organization and of long-term value development. coIn the event of poor conduct, the payout will also be changed downwards such that there is a need for consistency in the policy.

Considering all the details mentioned above, it is not recommended to include profits in the fiduciary responsibility of the board as the main focus should always be on loyalty, trustworthiness, and transparency to achieve the organization's objectives. The duty of care doesn't mean the any other sort of duties, such as maximize profits. The fiduciary responsibility of a board to shareholders of a corporation is to enhance its wellbeing and not just the value of the profits.