In corporate management the board of directors is the top team that takes on the responsibility of an entire firm. The board makes decisions on vision goals, mission, and objectives and is also involved with strategic planning, mergers and acquisitions, capital budgets, operating budgets, compensation, and other matters. The board is also responsible for hiring and firing the CEO as well as setting executive pay rates as well as bonuses, profit sharing and employee stock options. Boards are often organized around committees that concentrate on specific functions. The audit committee, for instance, works with the company’s auditors. The compensation committee is accountable for issues like the compensation of employees and stock options.
Boards are essentially the conscience of an organization. They ensure that all homework is completed and that the criteria are carefully analyzed prior to being presented to management to be approved by management. Certain presidents with a keen sense for discipline use the board as a means for enforcing quotas or other performance indicators, and to assess the performance of their subordinate executives.
Directors are not involved in the low-level management decisions but they play a significant role in setting up big policies for a business. They make key decisions for the company, including closing facilities. They decide where to invest the company’s funds, and they establish long-term goals for quality, growth financial, and human resources. The board should also set guidelines for its conduct and deal with legal issues like conflicts directors’ independence, conflicts of interest community benefits, as well as the evaluation of the CEO.