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The board of a directors does not get involved with day to day operations. The board of directors sets the strategy for the firm. That is because the board of

The board of a directors does not get involved with day to day operations. The board of directors sets the strategy for the firm. That is because the board of directors has the authority to hire/fire company management. Board of directors != Advisory board.

tomnipotent 6y ago
> The board of directors sets the strategy for the firm. I have never seen this be the case, though I can only speak for start-ups and early post-IPO eras. The board provides oversight over the CEO and other executives responsible for planning in the organization. They review quarterly earnings and other financials, and provide feedback and thoughts on what the company wants to do in the subsequent planning period (which is driven by the CEO, not the board). Usually the board and leadership team meet only once a quarter, with the occasional call in-between (but otherwise very little face time). More often than not the board's influence is in asking questions that help the CEO and leadership team better flush out their plan, pointing out potential issues or bringing up topics of discussion that may not have been considered. Maybe a board member has experience in something on your roadmap, or knows someone/company/product that can help. Maybe they feel very strongly for/against something, so you commit to getting back to them with your thoughts/plan of actions after doing some more due diligence. Maybe they think you want to spend too much on a new initiative next year, and want to see a revised forecast that bakes in a more conservative approach. Boards have say in executive compensation & equity grants, but rarely otherwise seem them get involved in financials. Usually they have their own financial analyst look over your data, and ask a lot of uncomfortable questions you don't currently have answers to that you maybe get embarrassed about when you finally do figure it out. In rare circumstances, the board may have negative or lukewarm feelings about what's presented and the CEO may decide to revise that plan, but it really depends on the CEO. New CEO's may be more likely to buckle to board pressure/suggestions than an experienced CEO. I've seen it both ways (usually the CEO doesn't want to hurt future fundraising and may acquiesce more readily). At the end of the day, it's the CEO leading strategy with the board providing a "first right of refusal/you're crazy" role.
- kortilla 6y ago
  > I have never seen this be the case, though I can only speak for start-ups and early post-IPO eras. That’s usually because the founder(s) still have majority control at that point so the board just takes an advisory role. The dynamic completely changes when the board members can form a majority and remove the entire C suite.
  - tomnipotent 6y ago
    > can form a majority and remove the entire C suite. Having this power doesn't give them any authority over strategy, it just means that with proper paperwork they can remove someone. But boards don't put someone in the pilot seat unless they expect them to fly. CEO's are given a considerable amount of latitude (remember Adam Neumann?).
    - varjag 6y ago
      This is splitting hairs. Being able to fire the execs very much guarantees your voice is more than advisory.
      - deleted 6y ago
        [deleted]
- C1sc0cat 6y ago
  Which unfortunately didn't happen at HP with the phone hacking scandal. The Chairman should have taken Patricia Dunn aside early on and told that the board had lost confidence in Her and some of the leadership team long before Patricia was forced out.
jariel 6y ago
"The board of directors sets the strategy for the firm." Not really. The Board is there to oversee the company on behalf of the shareholders. Their primary job is oversight, they hire and fire the CEO, will be involved in recruitment for C-Level. They may or may not be involved with any kind of strategy. They will definitely be involved in financial governance issues such as fundraising, IPOs, major debt issuances. They can be involved strategically by helping to form relationships, introductions, and in some cases providing guidance. But the board doesn't make plans, do strategies etc. They're not very involved. Most board members don't do much at all.
- rswail 6y ago
  That's because shareholders let them off the hook. The board represents the members (shareholders) of the company, they are responsible to them for the performance of their company, which reflects the investment in the equity. The CEO is an employee of the company. The power to set strategy may be delegated to him by the board, but the board is still responsible for it. Public companies have additional responsibilities of the board because they are also responsible to comply with the market's rules and government regulation (eg SEC regulations) that are stricter for public companies than private.

tomnipotent 6y ago

> The board of directors sets the strategy for the firm. I have never seen this be the case, though I can only speak for start-ups and early post-IPO eras. The board provides oversight over the CEO and other executives responsible for planning in the organization. They review quarterly earnings and other financials, and provide feedback and thoughts on what the company wants to do in the subsequent planning period (which is driven by the CEO, not the board). Usually the board and leadership team meet only once a quarter, with the occasional call in-between (but otherwise very little face time). More often than not the board's influence is in asking questions that help the CEO and leadership team better flush out their plan, pointing out potential issues or bringing up topics of discussion that may not have been considered. Maybe a board member has experience in something on your roadmap, or knows someone/company/product that can help. Maybe they feel very strongly for/against something, so you commit to getting back to them with your thoughts/plan of actions after doing some more due diligence. Maybe they think you want to spend too much on a new initiative next year, and want to see a revised forecast that bakes in a more conservative approach. Boards have say in executive compensation & equity grants, but rarely otherwise seem them get involved in financials. Usually they have their own financial analyst look over your data, and ask a lot of uncomfortable questions you don't currently have answers to that you maybe get embarrassed about when you finally do figure it out. In rare circumstances, the board may have negative or lukewarm feelings about what's presented and the CEO may decide to revise that plan, but it really depends on the CEO. New CEO's may be more likely to buckle to board pressure/suggestions than an experienced CEO. I've seen it both ways (usually the CEO doesn't want to hurt future fundraising and may acquiesce more readily). At the end of the day, it's the CEO leading strategy with the board providing a "first right of refusal/you're crazy" role.

kortilla 6y ago
> I have never seen this be the case, though I can only speak for start-ups and early post-IPO eras. That’s usually because the founder(s) still have majority control at that point so the board just takes an advisory role. The dynamic completely changes when the board members can form a majority and remove the entire C suite.
- tomnipotent 6y ago
  > can form a majority and remove the entire C suite. Having this power doesn't give them any authority over strategy, it just means that with proper paperwork they can remove someone. But boards don't put someone in the pilot seat unless they expect them to fly. CEO's are given a considerable amount of latitude (remember Adam Neumann?).
  - varjag 6y ago
    This is splitting hairs. Being able to fire the execs very much guarantees your voice is more than advisory.
    - deleted 6y ago
      [deleted]
C1sc0cat 6y ago
Which unfortunately didn't happen at HP with the phone hacking scandal. The Chairman should have taken Patricia Dunn aside early on and told that the board had lost confidence in Her and some of the leadership team long before Patricia was forced out.

jariel 6y ago

"The board of directors sets the strategy for the firm." Not really. The Board is there to oversee the company on behalf of the shareholders. Their primary job is oversight, they hire and fire the CEO, will be involved in recruitment for C-Level. They may or may not be involved with any kind of strategy. They will definitely be involved in financial governance issues such as fundraising, IPOs, major debt issuances. They can be involved strategically by helping to form relationships, introductions, and in some cases providing guidance. But the board doesn't make plans, do strategies etc. They're not very involved. Most board members don't do much at all.

rswail 6y ago
That's because shareholders let them off the hook. The board represents the members (shareholders) of the company, they are responsible to them for the performance of their company, which reflects the investment in the equity. The CEO is an employee of the company. The power to set strategy may be delegated to him by the board, but the board is still responsible for it. Public companies have additional responsibilities of the board because they are also responsible to comply with the market's rules and government regulation (eg SEC regulations) that are stricter for public companies than private.