board structure process evaluation in the management system in business ethics and corporate goverance in india it will be helpful to everyone in the master of business administration

1. Board structure
process evaluation
By - k.Uday kiran

2. Definition
 A board of directors is a group of
people who represent the
interests of a company
shareholders. They are elected or
appointed members who jointly
oversee the activities of the
company

3. Board structure and firm performance : evidence from india’s
Top companies
 professor Beverley jackling investigated the relation between internal
governance structures and financial performance of indian campanies ,
Effectiveness of board of directors including board size and board
busyness .
 A greater proportion of outside directors on board were associated with
improved Firm performance .
 The findings suggest that larger board size has a positive impact on
performance
 Similarly the results showed that outside directors with multiple
appointments appeared to have a negative effect on performance ,
suggesting the “busyness” did not add value .

4. Board of directors : Effect of a board composition on firm
sustainability performance
 Findings reveal that firm with more diversity on the board and a separation
Between chairman and CEO roles show higher sustainability performance .
 Higher number of independent directors leads to lower sustainability
performance .
 The influence of specific characteristics of a board composition ( independent
directors of board , board diversity , separation of board chair and CEO roles )
have relationship with sustainability performance of firm .
 As such the composition of board of directors affects the firm’s sustainable
performance .

5. Board as principle instrument of governance
 Share holders doesn’t run the company and management doesn’t
own the company .
 Board of directors lies between shareholders and management .
 Board of directors are elected by shareholders and board of
directors hire management to run the company .
 Board of directors set strategies , Arrange resources and monitor
management performance , set standards and values of company .

6. Responsibility of Board
A board is responsible for its acts and accountable to the company
 There are two types :
 Collective responsibility
Acting in the best interest of company
Accountability to the owners
Statutory duties
Fiduciary or trustee-ship duties
 Individual responsibility

7. Power of the board
The board has absolute power to conduct the affairs of the company .
Also they can delegate their power to who may or may not be member of
the board ( by company act , article of association, passing resolution with
majority .
 Board of directors draws its power from following
sources :
• The company constitution
• The law
• Resolution passed by shareholder

8. Functions of board of directors
Oversight : approving company’s strategies , annual budget
and plans , engaging external auditors , ensuring integrity
and reliability of company annual reports , reviewing
activities of company .
Directional : setting company’s mission and vision , board
composition , appointing various committee .
Advisory : refers to provision of general guidance to the
management keeping them informed on what is happening
in the rest of the corporate world and offering specialized
help in certain areas

9. Tools available to board of directors
 Composition : ensure the functions of board are performed in satisfactory
and professional manner .
 Independence : they should be free to take decisions for common good of
company .
 Committees : board can form number of committees to examine a matter in
greater detail and come up with summarized report for the consideration of
board .
 External help : board can take assistance from external experts to that they
are able to take correct decisions
 Government intervention : board take help of government or society help to
conduct the affairs

10. Ineffective boards
 Ineffective boards are those board who’s members are not
fully aware of the their responsibilities and works of the firm .
Types of ineffective board :
 Rubber stamp board or yes men board
 Good old boys board or country club board
 Paper board
 Trophy board

11. Rubber stamp board : they simply accept whatever proposal
given by executive directors or chairman
Good old boys board : those are old friends of chairman and they
attend meetings and simply talk about their good old days rather
than the conduct of the company .
Paper board : they only exist on paper and plays no role in
company
Ex : wives and daughters of principle shareholder of company
Trophy board : it consists of people with big name in society
(politicians , film actors , sports star etc. ) but does not have
acumen for conduct of company .

12. Good broad room practices
 Contributing effectively in decision making process .
 Written procedure of conduct of board meeting and monitoring .
 Providing same information for all the board of directors .
 Determining Sufficient information and role of the board member .
 Board have to create balance between borrowing (funds) and equity financing .

13. Instruments to enhance effectives in board
 Clarifying leadership roles and responsibilities
 Setting management delegations and report arrangements
 Legal and regulatory obligations
 Financial structure of business and budget
 Understanding current status of business
 Meetings and budget cycle and annual report
 Defining conduct of staff and directors

14. Benefits of effective board committees
Assists the board in its decision making
• brings together non executives the management
• allows detailed discussion on management matters
• focusses on strategic decisions required of the board
 Supports board responsibilities in key areas
• Audit , internal control and risks
• governance issues and corporate policies
• others , health , safety , environment etc .
Defined terms of reference and limitations

15. Exploring strategy and board structure in nonprofit organizations
 Non profit organizations make decisions that involve interpreting
the development and implementation programs and services and
creating processes and structures to monitor and control resources
for optimal impact .
 Non profits need to consider multiple stakeholders in resource
development .
 The effectiveness of organization adaptation depends on decisions
it makes concerning how well the organization will cope with
coalition’s perceptions of environmental conditions .

16. Board’s role In risk management
 Board should be aware and execute :
 significant risks faced by company
 effects on shareowners
 importance of stakeholder confidence in the organization
 communication with investment community
 Board must ensure :
 A clear risk management policy
 effectiveness of performance of risk management policy
 sufficient time to discuss strategies in face of crisis

18. Role of Board of directors as a core element of corporate governance
In corporate social responsibility (CSR)
 While corporate governance is the force behind CSR aims and objectives in
organizations , the Board of directors as a core element of corporate
governance are responsible for achieving and monitoring the set aims and
objectives .
 Jain and jamali (2016) conducted a review highlighting the positive role of
corporate governance on CSR performance at three levels ; firm , group ,
individual . Focusing on the board diversity have reviewed the relation between
the composition of board and both CSR performance and decision making
point of view

19. Board Evaluation
 Should consist of right people :
 Skills / experience
 Effective contribution
 Representative / accountability
 Get right information :
 Director orientation / education
 Pre reading info
 Board presentation
 Updates between board meetings
 Effective Utilization of time :
 Focus on important issues
 Balance of decision time
 Engage at oversight level

20. Thank you