While the number of roles that a board fulfils varies, there are essentially two broad roles for every board. The first, and most discussed role, is its monitoring role.
The second, and much less investigated role, is the board’s service role. In this role, the board may take on direct responsibility for making major strategic decisions, such as in times of crisis or when confronted with succession decisions or it may take on a more indirect role for advising and counselling the top management team in its strategic deliberations.
Optimal strategy formation requires in-depth knowledge of the organization and its environment. This reality is a central source of the problem – how can Board Members or trustees who only operate as part-time overseers and advisors, effectively contribute to, appraise, and challenge the development and execution of the firm’s strategic orientation? In other words, what is the proper type of involvement by the board to assure the firm’s future success and longevity?
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