The difference between governance and management

The notion of management as a hierarchy is commonplace-as in the classical pyramid of Figure 2.1.

Figure 2.1 The classical depiction of management

A chief executive officer (CEO) or managing director, has overall managerial responsibility, with other
managers reporting to him or her and so on down the management hierarchy. Authority and
responsibility are delegated downwards, with matching accountability expected upwards in return. The
classical theory enables functional department to be shown and distinctions drawn, between line
management responsible for executive action and staff management responsible to advise the line. We
understand that this is an inadequate picture of the realities of management, but we generally accept
that management operates through hierarchies. We know who reports to whom in the organization.

But where is the board in classical management theory? Boards seldom appear on organization charts.
The board is not part of the management structure; nor is it a hierarchy. Each director has equal
responsibility and similar duties and powers under the law. There is no executive ‘boss’ of a board.

In Figure 2.2, the board has been superimposed on the management structure.

In a unitary board-that is, a board with both executive and non-executive outside directors-the
executive directors hold a managerial role in addition to their responsibilities as members of the board
of directors. Shown in the figure, they sit in both the board circle and the management triangle. As
executives, they are employees of the company and covered by employment law. Directors, as such,
are not employee and are subject to company law. The other directors, shown in Figure 2.2 are the
non-executive or outside directors-members of board circle, but not part of the management hierarchy.
Other managers, who are not on the board, are also shown with a cross.

Figure 2.2 The board and management

A unitary board has both outside, non-executive directors (shown as   in the diagram) and executive
directors (shown as a   in the diagram). Executive directors have to ‘wear two hats’ – as directors on
the board and as top executives in the management hierarchy.

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A further important distinction can be drawn between non-executive directors who are independent of
the entity, and non-executive directors who, although they are not executives of the company, have
some link with it. Independent non-executive directors have no relationship with the company that
could affect the exercise of independent and objective judgment; Those who are not independent have
some link with the company, such as close family ties to the chairman, being a representative of a
dominant shareholder, having previously served as an executive of that company, having links with
major trading partners of the company, and so on.

Such connections raise questions about these directors’ independence. There may be good reasons for
having them on the board, but we shall refer to them as ‘connected’ non-executive directors. These
issues will be explored in more depth later. In the United States, the common practice is to refer to
non-executive directors as ‘outside directors’. For consistency, we will use the abbreviations INED
(independent non-executive director) and CNED (connected non-executive director). Some authorities
refer to a CNED as an affiliated non-executive director.

We now have a model that enables us to distinguish governance from management; see Figure 2.3.

Figure 2.3 Governance distinguesed from management

Management runs the business; the board ensures that it is being well run and run in the right direction.

Board responsibilities

We can now explore what the board does. Overall, the board’s task is to direct the company, which is
why directors are so-called. This activity can be seen to involve for basic elements-strategy formulation;
policymaking; supervision of executive management; and accountability to shareholders and others.

In fulfilling their duties, directors have to consider the future of the company as well as its present
position and recent results. They also need to look inwards at the organization and its component
parts, and externally at the company in its competitive market position and in its broader economic,
political, and social context. These basic perspectives and processes are shown in Figure 2.4.

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Figure 2.4 The basic board perspectives and processes

In formulating strategy, the board works with top management, looking ahead in time and seeing the
firm in its strategic external environment. Strategies then need to be translated into policies to guide
top management action and to provide plans for subsequent control. The board then needs to monitor
and supervise the activities of executive management, looking inwards at the current managerial
situation and at recent performance. Accountability involves responding externally, reflecting corporate
activities and performance to the shareholders and other stakeholders with legitimate claims to
accountability. Of course, a simple 2 x 2 matrix inevitably presents a simplified view of board processes-
but at least by looking forwards and backwards in time and internally and externally in space, it is all-
embracing!

The Cadbury Report (1992) supports this framework, commenting that ‘the responsibilities of the board
include setting the company’s strategic aims; providing the leadership to put them in effect, supervising
the management of the business and reporting to shareholders on their stewardship’.

Boards vary in the extent to which the board as a whole engages in these functions or delegates work to
the CEO and the management team, while ensuring that the necessary monitoring and control
processes are in place. An extension of the basic quadrant of board processes recognizes this by
introducing a central cell showing that boards work with management, through their chief executives or
managing directors. Figure 2.5 depicts this process. Boards can choose the extent of their delegation of
functions to the management. In some cases, for example, boards play a major part in the formulation
of the company’s strategy; in others, this is delegated to top management, with the board receiving,
questioning and finally approving management’s strategic proposals.

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Figure 2.5 Framework for analysing board activities

Figure2.6 can also highlight a potential dilemma for the unitary board. The roles in the right-hand
column-strategy formulation and policymaking-are performance roles, concerned with the board’s
contribution to corporate direction. Those on the left-executive supervision and accountability-are
essentially concerned with ensuring conformance.

As Lord Caldecote, a very experienced board chairman, once commented, ‘a problem with the unitary
board is that directors are marking their own examination papers’. In a two-tier board the roles are
separated with the executive board responsible for performance and the supervisory board responsible
for conformance.

Alternative board structures

Unitary boards

Two-tier boars

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http://bconsi.blogspot.com/2016/03/7-functions-of-management.html
Functions of Management: The tasks which are taken to achieve organizational goal is called
management. But what are in management functions we need to know. L. A. Allen said that,
"Management is what a manager does." But what functions are operated by a manager?

Generally, the tasks such as planning, organizing, leading, controlling are done by a manager.
So, we've got some tasks list which are done by a manager which are called as management
functions.

To know well about management we need to know well about managerial functions. 

Mainly, there are four functions in management. but, we can elaborate the functions
into more sections. A manager need to operate various functions to acquire
organizational goal.

Below, we'll discuss all of functions of management.

01. Planning
Planning is a management process. It is the first step of management function.
Planning is how to do a work, when have to do this work, who will do this work and
by whom will do this work. Planning means the process of achieving goals,
development and establishment. Planning means deciding how best to achieve goals,
profit and applying best strategies.

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02. Organizing
Organizing is the second function of management. it follows the planning. Organizing
is a management process that refers to the relationship between people,work and
resources that is used to achieve goals. In organizing system top management first
fixes the common objective, way and resources. In organizing the manager make
different kind of department and mixed all the department for better work. 

03. Staffing
After the organizing, the function of management is staffing. Employee are the most
important resource of any organization. The right staff is very important for a
company because he can change and ensure the organization future success. Staffing
is like a function or term that refers recruitment, selection, acquiring, training,
appraising employees.

04. Directing
Directing is a process in which the managers instruct, guide and overview the
performance of the workers of a company to achieve goals. Directing is a very hard
and heart task of management process. it the function of Staffing. Planning,
organizing, staffing have not any place if direction function does not play its role
properly.
Directing is a continuous process that run its function at top level and flows to the
bottom with organizational hierarchy.

05. Motivating
Planning has been established and organization has begun now the motivation is
necessary to carry out the whole work. In management motivation refers ways in
which managers promote the productivity in their employees. Motivating is a
manager's job to motivate employees to do their jobs well and fell to perform well
with happiness.

06. Co-ordination
In organization, different types of work are performed by various departments and no
single department or group can not achieve the goals if they doesn't work as a whole.
Co-ordination is ensures the unity of action among individuals, department and
groups in carrying out the different tasks as to achieve the organizational goals
properly. The coordinating is only applies to groups efforts but there is no need it
when only individual is working.

07. Controlling
Controlling is the last step in the management functions process. This process is
simply steps of manager to determine whether organizational goals have been met.
Controlling is a continuous and forward looking process which is the standard of
measurement of a company or organization. There is a close link in planning and
controlling in management function process.
A manager requires to do prediction, taking decision, determining controlling area etc
various type of functions along with regular functions which are discussed above. In

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one word, all the tasks are completed by the manager to achieve goal are the functions
of management.