It must not only protect the interests of Shareholders, but it must also consider all interest groups, focusing on working for the continuity of the organization.
The main responsibility of the Board of Directors of an organization is to attend to and provide for its continuity. The Board of Directors plays an essential role in generating the necessary trust to create an adequate context that allows the company to carry out its operations correctly. It must not only protect the interests of Shareholders, but must also consider all interest groups, focusing on working for the continuity of the organization as a primary way of providing the future and, consequently, of adding value.
This goal is achieved primarily through its five key functions: 1) care and promotion of viable sustainability, 2) governance, 3) strategy, 4) supervision and control, and 5) management support.
He viable sustainability care refers to the long-term vision and ensuring the continuity of the organization, which is the most important objective of the Board of Directors. To achieve this, you must address the viability and sustainability of the company so that it can fulfill its purpose by generating value for Shareholders and other key stakeholders on an ongoing and lasting basis. The main topics that are usually included in this function are: guardianship of the organizational unit, attention to the development of organizational competencies necessary to compete, management of key stakeholders, adaptation to change and the promotion of innovation, and , finally, crisis management (and the necessary intervention in case the organization is coping with it).
The governance It consists of ensuring that the organization is in a position to make all the decisions necessary for its effective operation. The following tasks are usually included in this function: the proper functioning of the governing bodies, the proper exercise of general management and senior management, planning and management of the succession of key decision-makers on the Board of Directors and management, and the sudden succession of Directors and the general manager.
The Board of Directors is responsible for ensuring that the organization has a strategy adequate, explicit and communicated, that guides its actions and leads it towards its objectives and the fulfillment of its mission. To achieve this, you must perform the following tasks: ensure that the strategic formulation process is led in the company, define some aspects of the strategic orientation statement, the discussion and approval of the strategic formulation, and, finally, the approval of the annual budget. both operations and investments.
The Board of Directors must supervise compliance with the regulatory framework and organizational policies, and the management carried out by the top executive and his closest team. The main tasks that are usually included in this function of Supervision and control are: regulatory compliance, strategic control, budgetary and financial control, management control and complianceand risk management.
Lastly, the function management support refers to the correct articulation and collaborative work between the Board of Directors and senior management. This correct articulation is achieved with control tasks, but also with support. The main tasks that arise from this function are: accompaniment to the General Manager, contribution to managerial decision-making, and representation and relationship.
It is worth mentioning that the five key functions are exercised differently according to the type of Board existing in the organization and the factors of the context in which it is inserted.
Professor at the IAE Business School, Austral University
* This text is an excerpt adapted from the book “Directories creating value”whose authors Pedro Vázquez and Alejandro Carrera, are professors at the IAE Business School, in charge of the PwC Chair of Corporate Governance.
Source: Ambito
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