BOLA: OHPs on Ethics and Corporate Governance

Board Dynamics and Effectiveness

The style and level of board activity by indicate a Director-shareholder separation and agency problem. A board must fulfil its minimum legal requirements, but for actual company running, board members can be

Detached/passive. Detachment may be important if this enhances capacity for objectivity and independent judgement. Detachment may bred passivity. Acquiescence may stem from the "in-crowd" problem.
or

active in membership embroiled in strategic & operational decisions.

The board as an elite

appointed by a few
through appointing sub-boards it can perpetuate itself and constrain scrutiny of members

a passive board		proactive board
ceremonial, turn up for meetings and the buffet lunch. Collect fees	--------	executive, directors manage actual functions /operations
acquiesce in strategic decisions and rubber-stamp mgt policies	--------	lead on strategic analysis, monitor mgt performances to ensure shareholder interests
poor access to information, no MIS	--------	analyse and question. Mine for data

Position on the continuum depends on

company size and type, industry category
stage in company lifecycle
whether it is in stable or crisis conditions
composition of board & dispositions of directors
locus of power between directors and management.

OHP 8 on Ethics and Corporate Governance

This resource was written by Chris Jarvis for the BOLA project.