High Performance Boards, 2nd Edition

CHAPTER 18The Board–Management Relationship

Observing boards’ decision-making is an exciting and relatively new undertaking. In the past, researchers found it difficult to study directly the mechanics of board activities. This precipitated the growing interest we see today in considering and analysing the board on the strength of its decision-making capacity and characteristics.

Of major importance in this context is the issue of the board's relationship with management. Today's active boards seek to play a distinctive and additive role in the organisation. What's more, the nature and quality of their communication with management is critical in defining and achieving a sustainable business culture. There are two main aspects of the board–management relationship: supervision and support.

Supervision

In its supervisory role, a board works to ensure that management is making sufficient effort in critical strategic areas, such as managing risks and responding to competitive threats. The focus on compliance that was typical in the past has proved insufficient in a competitive globalised environment. As a result, boards have become more directly and deliberately involved in charting their companies’ strategy. They have emerged as a source of extended vision, helping to contextualise and interpret many of the opportunities and challenges facing the organisation.

In maintaining a clear view of the company's strategic differentiators, the board has an important role to play in drawing ...