It is worth emphasizing that an organization's success is dependent on the strategic management team's ability to develop plans that align the organization's resources with its goal and vision for the future. Furthermore, according to Wheelen, Hunger, Hoffman, and Bamford (2014), "a board of directors is involved in strategic management to the extent that it performs the three tasks of monitoring, evaluating and influencing, and initiating and determining" (p. 45). To improve the efficiency and effectiveness of the board of directors in a company, there are some issues that should be taken into consideration regarding the working of this boards.
Firstly, they should be given the power to make and influence major strategic decisions of the organization. Notably, the top position gives them the ability to oversee the progress of the firm as well as foresee any future challenges and industrial trends. Therefore, this means that they are actively involved in the organization processes. In fact, Wheelen et al. (2014) argue that "their heavy involvement in the strategic management process places them in the active participation or even catalyst positions" (p. 45).
Furthermore, Ana Dutra (2012) maintains that to add strategic value to the board of directors, their performance should be talent centric. That means that at its basic level, the composition and diversity of the board should be a clear evidence of its capabilities. To begin with, the organization should attract and recruit directors who can provide valuable, strategic input using their background expertise of the industry (Dutra, 2012).
What is the relationship between corporate governance and social responsibility?
According to Wheelen et al. (2014), social responsibility refers to the obligations that an organization has towards the society in which it operates. More so, this extends beyond their need to make profits and more into helping the communities. Notably, there are four main responsibilities of a firm to its society, and this includes economic, legal, ethical and discretionary responsibility (Wheelen et al., 2014). Specifically, it is concerned with how the company treats its shareholders (Said, Hj Zainuddin, & Haron, 2009). It is important to understand that treating stakeholders in a socially responsible manner helps to create successful relationships with human capital both within and outside the company (Poudel, 2016).
It is worth noting that the strategic decisions made at the corporate governance level play a significant role in the extent to which a company embraces its corporate social responsibilities (Poudel, 2016). As a matter of fact, the corporate governance is mainly concerned with achieving a balance between economic benefits and social obligations of the organization. More so, it provides the framework for the efficient use of a firm's resources and this also affects the extent to which a company commits its resources to fulfilling its social responsibilities.
Moreover, it is noted that the failure of a company to meets its ethical or discretionary responsibilities may subject the firm to legal responsibilities. As a matter of fact, the corporate governance will be held responsible for whatever decisions they made the affects operational efficiencies. In fact, Wheelen et al. (2014) maintain that "being socially responsible does provide a firm with a more positive overall reputation" (p. 73).
References
Dutra, A. (2012). A more effective board of directors. Harvard Business Review. Retrieved 30 March 2017, from https://hbr.org/2012/11/a-more-effective-board-of-dire.
Poudel, R. (2016). Relationship between corporate governance and corporate social responsibility: Evidence from Nepalese commercial banks. Journal of Nepalese Business Studies, 9(1), 137. doi:10.3126/jnbs.v9i1.14603.
Said, R., Hj Zainuddin, Y., & Haron, H. (2009). The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies. Social Responsibility Journal, 5(2), 212-226. doi:10.1108/17471110910964496.
Wheelen, T., Hunger, J., Hoffman, A., & Bamford, C. (2014). Strategic management and business policy (14th ed.). Boston, MA: Pearson.
