Boards of directors are coming under increasing scrutiny in terms of ther contribution in monitoring and controlling management, particularly in the wake of high-profile coprorate frauds and failures, and also their potential to add value to organizational performance through involvement in the
strategy process and through building relationships with key investors.
Despite the importance of these issues, not only to organizations but also arguably to national competitiveness, the nature of board activity remains largely a black box, clouded by prescriptions, prejudices, and
half-truths. This book responds to calls for greater scrutiny of boards of directors with an in-depth examination of directors of UK organizations, drawing on the accounts of directors themselves as to their roles, influence, and the potential and limits to their power.
Much work on
boards of directors has labelled the board as a rubber stamp for dominant management, and non-executive directors in particular have been variously described as poodles, pet rocks, or parsley on the fish. Such accounts are rooted in assumptions of board activity that are essentially adversarial in
nature, and that the solution to the 'problem' of reconciling the interests of managers with those of shareholders is to increase the checks and balances available to the board of directors.
The findings of this study show that boards, in many cases, are far more than passive rubber
stamps for management and that non-executives are encouraged to act as trusted advisers to the executives and the chief executive, rather than solely monitors of executive activity. Boards are important mechanisms in maintaining the strategic framework of the organization through setting the
boundaries of organizational activity. The potential of the board members, in particular the non-executives, to fulfil such a mandate depends on a number of factors, including ability, willingness to engage with the organizational issues, and the degree of knowledge they have relevant to the host
firm. Above all, the degree of trust built between members of the board, and between the board and key external constituencies, is at the heart of effective board behaviour.
1. The Changing Expectations of Boards of Directors
2. Perspectives on the Contribution of Boards of Directors
3. Researching Boards of Directors
4. The Strategic Role of the Board
5. The Control Role of the Board
6. The Institutional Role of the Board
7. The Dynamics of
Board Process
8. Conclusions
There are no Instructor/Student Resources available at this time.
Philip Stiles is a Lecturer and Senior Research Associate at the Judge Institute of Management Studies, University of Cambridge. He is a member of the Centre for Corporate Leadership and Accountability at Cambridge and is researching into a number of areas including board dynamics, the Chief
Executive succession process, and the relationship between both institutional and private investors and the organization. Bernard Taylor is Executive Director of the Centre for Board Effectiveness and Emeritus Professor of Strategic Management at Henley Management College. He is Director of the
European Council on Corporate Strategy and Senior Adviser to the European Council on Corporate Governance and Direction for the Conference Board Europe.
