Strategic Management: Role of the Board

Nonprofit Boards: Roles, Responsibilities, and Performance (Nonprofit Law, Finance, and Management Series)According to Bacon and Brown, BoDs, in terms of strategic management, have three basic tasks.
  1. To initiate and determine: A board can delineate an organisation’s mission and specify strategic options to its management.
  2. To evaluate and influence: A board can examine management proposals, decisions and actions; agree or disagree with them; give advice and offer suggestions; develop alternatives.
  3. To monitor: By acting through its committees, a board can keep abreast of developments, both inside and outside the organization. It can thus bring new developments to the attention of the management, which it might have overlooked.
While the BoDs are not expected to involve itself in day-to-day operating decisions, they are nonetheless expected to consider and give their views on all such matters that have long-term connotations. In fact, such matters by convention are referred to the board. These relate to issues such as introduction of new product, new technology, collaboration agreements, senior management appointments and major decisions regarding industrial relations.
The directing function of the board has internal and external components. Internal components relates to various actions taken by the executives and their implications for the organization, including R&D, capital budgeting, new projects, new competitive thrust, relationship with financial institutions and banks, foreign collaborators, major customers and suppliers. External component relates to identifying broad emerging opportunities and threats in the environment and feeding them to the management so that “strategic mismatch do not occur”. The board should see that the organization always remains in alignment with the social, economic and political milieu.