Role of Boards in Corporate Governance Report
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Added on 2020-01-06
Role of Boards in Corporate Governance Report
Added on 2020-01-06
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EssayOn Role Of Boards InCorporate Governance1
INTRODUCTIONCorporate governance is considered as combination of diverse relationship betweencompany's management, board of directors, shareholders and other stakeholder. With anassistance of this, organisations can easily accomplish goals and objectives and leads business toimpressive level of success. Overall performance of organisation can also be improved inoptimistic manner by monitoring of process. Management focuses on decisions to enhance thecontribution of firm to the economic development (Adams, 2008). Relationship with diversemembers can be improved and make sure that the financial market, institutions are providinggreat support to development. There are number of principles that need to be consider byorganisations for sustainable development. Management need to ensure that the rights ofshareholder and key ownership functions are properly maintained. MAIN BODYIt is significant for boards to make sure that they are having activities in appropriatemanner which reflects the best interest of shareholders. Activeness of board members providesan ability to enhance effectiveness of corporate governance. Number of activities are performedby board members to meet the ethical standards for better dealing with diverse situations. It hasbeen identified that the committees and board provides an independent working to themanagement so that goals and objectives can be accomplished in desired form. It is alsonecessary for boards to have effective understanding of diverse skills and factors that helps indealing with conflict situations (De Andres and Vallelado, 2008). Board must have activities thatprovides detailed review of performance so that challenge can be presented among management.Board members needs to meet appropriate level of commitment in order to fulfil responsibilitiesand duties. It has also been witnessed that the key role of chairperson and CEO should not beheld by the same person. Transparency factors need to be promoted by the board for sustainabledevelopment of corporate governance. Good governance demands a process that serves outcomein reasonable time-frame (Armstrong, 2010). Members also need to focus on identification ofdiverse conflict situations and determine ways to overcome it in appropriate manner for effectivestandardisation of corporate governance. 2
As per the detailed study, the board of directors is referred as body that are elected orappointed for collective accomplishment of activities that can enhance productivity oforganisation. It has been identified that the board of directors mostly have relationship with theshareholders of the entity (Bebchuk, 2010). However, managers have detailed evaluation of dayto day functioning within organisation. Activities of boards are determined with a considerationof power, duties and responsibilities which are delegated to corporate governance. Working ofboards have reference of laws that provide detailed reflection of overall development. There aretwo types of boards which plays key role in development of corporate governance. Classificationof boards can be as executive and non-executive (Dyck, 2008). In addition to this, the executiveboard focuses on selection of company strategic objectives and decides the leadership activitiesso that standards can be maintained. Moreover, the effective supervision provided to themanagement also strengthen to the organisation and meets criteria of corporate governance. Onthe other side, the non executives are appointed on part-time basis and plays vital role inperforming diverse duties (Bebchuk, 2009). For example, the working of chairperson andeffective participation of member in different committee helps in meeting ethical goals andobjectives. Classification of committees can be as remuneration committee, audit committee. It is also necessary to ensure that the selection of members is according to legal aspectsand they are chosen to meet goals. Consideration of legal factors enhances the relationship withshareholders which is beneficial for sustainable corporate governance. One of key responsibilityof the individual being a part of board is to indicate the interest of shareholders as a group(Bhagat and Bolton, 2008). These kinds of aspects enhance the morale of board members toperform diverse organisational activities so that needs can be accomplished in desired form. Inorder to have effective development of corporate governance the lawsuit can be file byshareholder to analyse the level of performance and his duties. One of key role of boards and committees is to build a positive environment so that goalsand objectives can be accomplished in desired form and lead business to impressive level ofsuccess. They are performing number of activities that access the key aspects that can bringsuccess in the future. It is also significant for board to make sure about its working style so thatcollective work style can be promoted in optimistic manner. It has been identified that thecoordinated team work provides an ability to meet goals in desired manner and create better3
opportunities in regard to corporate performance. It is also necessary for board members to makesure that the duties are performed in appropriate manner so that business needs can beaccomplished in proper way (Tricker, 2015). Moreover, there is need for greater control overcorporate enterprises due to the advancement in concern regarding corporate failures. Effectivemonitoring of activities is also essential in order to meet the goals and objectives and make surethat the business is effectively having progress (Omran, 2009). In addition to this, the establishment of vision, mission and values is significant as itindicates the role of boards in corporate governance. Boards focuses on the determination of thecompany vision and mission so that current operational activities can be completed effectivelyand future development opportunities can be identified. In support of this, the evaluation ofvalues that need to be promoted for better corporate governance. Number of company policiesare being established so that goals and objectives can be achieved in desired form. It is alsonecessary for committee and boards to consider strategy selection so that activities can beperformed in appropriate manner (Brickley, 2010). Review and evaluation of current and futureopportunities is need to be consider effectively. Moreover, the threats and risks in the externalenvironment can be also be identified. These kinds of activities facilitates in determining variousways that can overcome issues in appropriate manner. Risk and strengths that relates with thefuture aspects can also be assessed. Strategic activities need to be design in such manner that theimplementation activities are being accomplished effectively (Huse, 2008). One of key role ofboard and committees is to determine the business strategies and plans that underpin thecorporate strategy. It is also significant for management to ensure that the organisationalstructure is well maintained. It must holds the capability of implementation so that designedactivities or strategies can be employ in most suitable way. Reflection of accountability to the shareholder is also one of critical role that helps indevelopment of corporate governance. Board of members have responsibility in regard to actionsthat are related with the stakeholders. Members need to make sure that the communicationsystem is properly maintained so that effective sharing of information is accomplished withinorganisation. Regular interaction with the stakeholder and shareholder is also essential because itprovides an ability meet goals and objectives (Kirkpatrick, 2009). It also promotes theunderstanding aspects in appropriate manner by reflecting the interest of shareholders and further4
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