The legal structure of an organization and its bylaws establish the roles and powers of the management board. These specific powers could also be outlined in the bylaws. Most boards regardless of their precise wording, do not have unlimited power. They delegate decision-making to senior management or, in the case of non-profits, staff. The main function of the board is to determine if the organization’s performance as a whole is satisfactory.

In the case of large public companies directors are legally obliged to serve as fiduciaries, representing shareholders of shares or stocks, and ensuring that the management doesn’t spend money, deplete assets, or violate the law. In a sense, the board is in a position to assess the performance of the CEO and make a decision regarding the compensation of the CEO.

Many boards also fulfill other duties. These include risk and resilience, sustainability, corporate strategies technology and digitization and corporate strategy. To do this, boards need to be able to take on more responsibility and be more active to keep up with any new issues that arise.

If the board begins to assume management duties whether through making decisions that could only be taken by a board of directors, or by taking over management duties, then it may upset functions of the management board the carefully planned structure designed for high-efficiency success of the organization. This could cause a greater turnover of managers and CEOs since they lose faith in the board’s ability in handling issues when they go wrong.