Question

“Boards have considerable freedom to delegate board functions to management. This interplay between the board and management raises a crucial aspect of corporate governance –where do boards focus their attention” (Tricker 2015, p. 182). Critically examine this statement, placing exceeding emphasis on the basic functions of a board. Draw from examples of an organization that you are familiar with to justify your discussion.

Word count for this work is 1100 plus or minus 10%

Answer 1

A business is such a large unit that it requires a large number of people to manage it. Some people are directly related to the working of the business while others are indirectly related to the working of the business but all are equally important. For better managing the working of the business, a Board is made to look into the matters of the business and make sure that the working is going on in proper way. The main role of the board is to make plans and rules for the efficient working in the organization. All the plans of the board is made keeping in mind the welfare of employees, organizational goals, etc.

Corporate governance is the set of rules and regulations which are set to ensure proper working in the organization. These rules are set to make sure that the work is being done properly and the company guidelines are met. Various factors are looked upon before making the rules so that the interests of the people are saved. The board is responsible for making rules and regulations under corporate governance. The basic purpose of corporate governance is to keep check on the interests of the people and make sure that their interests are not colliding.

The board delegates some of its responsibilities to the lower management for better results. The lower management interacts with the employees, shareholders, suppliers, etc. and understands their grievances. Then the grievances of the people of the organization is told to the board and then accordingly, the rules are made. It is basically the duty of the board or the Corporate government to maintain the law and order in the organization. Every grievance of the people is looked upon and rules are made accordingly.

The basic functions of a board are:

1. Setting company goals

2. Recruiting the senior level executives like CEO, CFO, etc.

3. Establishing employee compensation

4. Making sure that the resources of the organization adequate

5. Making sure that the company has enough tools to efficiently run its operations

6. Making rules and regulations for the organization

These days because of increased frauds and employee harassment, the government has to jump in and make regulations for every organization to protect the interest of the employer and employee. The government of various countries have made various rules according to the types of problems that the employees, suppliers, stakeholders and all the other people associated with the business face. In India, various labor laws are formulated to protect the interest of the employees like basic pay, variable pay, allowance for house and rent for the employees who are from other state and living there to earn, rules for women safety and upliftment, etc.

The board delegate its authorities to the management because the management is directly connected to the employees and it will be better that the grievances are solved as soon as they arrive. The management looks after the grievances of the employees but the board keeps an eye on whether the management is doing its duties properly or not. The board makes sure that the rules set by them are being met or not.

The board can delegate its authority but not the responsibility. The rules and regulations will be made by the board but their authority to monitor and make sure the rules are being followed or not can be delegated to the manager who will be entitled to keep an eye on the rule being followed or not. Since the authority of the work is delegated, the board will still be responsible for any misconduct on the part of the person to whom the authority is delegated.