Review of the Potential and Practice of Professional Roles and Responsibilities of Executive Directors on Boards

By O'Toole, Thomas | Irish Journal of Management, January 1, 2006 | Go to article overview

Review of the Potential and Practice of Professional Roles and Responsibilities of Executive Directors on Boards


O'Toole, Thomas, Irish Journal of Management


ABSTRACT

The roles and responsibilities of executive directors on boards are given scant literature attention in comparison to their non-executive counterparts, and potential professional roles and responsibilities receive minimal review or mention even in the light of a growing focus on ethical behaviour and advocacy for directors to take personal responsibility. The professional roles and responsibilities of human resource and marketing directors are the focus of investigation in this paper. Could these roles and responsibilities lead these directors to become representative of other stakeholder groups or, indeed, are they relevant? A mix of desk and empirical research is used to explore these questions and implications for practice developed. The roles and responsibilities would appear relevant but are at a nascent stage of development and the likely pressure for adoption would appear to be external to the board.

INTRODUCTION AND BACKGROUND

The board of directors is a key focus of governance research and of regulatory attention. The research and regulatory focus tends to be on the independence of boards, role of CEO/Chair, executive pay and audit. All the major governance reports (from Cadbury, 1992, to Higgs, 2003) examine aspects of these issues which are critical to the control of corporations. By its nature, corporate control is driven by financial accountability for shareholder interests and thus regulation, practice and research is concentrated in this arena. While most commentators accept that boards have a wider accountability remit than just those of the shareholder, it is difficult to prioritise these issues unless they directly affect the accumulation of wealth to the shareholder. Wider accountability pressure on boards is, perhaps, coming from the general public and other interested groups, given the employment and global impact of large public companies. While boards have always been under scrutiny and this lens tended to be financial, in the light of the 'Enron effect' in the US and the political pressure for social responsibility brought on by global operational difference in MNCs and the anti-globalisation movement, ethical conduct is now seen by some as a means of ensuring boards function effectively while not being overtly regulatory or mandating in detail the roles and responsibility of each director.

The conduct of individual board members is of course culturebound to some extent. However, Higgs (2003) and others have identified clear roles for non-executive directors and the broad role of the board has been specified. Indeed, aspects of the role of inside directors or executive directors have been delimited. However, professional roles and responsibilities of executive directors have been largely ignored. This paper focuses on human resource and marketing directors but it would appear that beyond fairly limited parameters financial directors' professional roles may also be very scantly outlined.

Professional roles and responsibilities are important from an internal and external context. There is a sense that managers' self-interests are well catered for on boards and there have been many controversial reports, especially in the popular media, about supposed excessive executive remuneration and pay-outs after the sale or purchase of companies. Externally, pressure for recognition and the activism of individual stakeholders puts further pressure on the executive director because, as a professional, he or she may have wider employee or consumer responsibilities not inherent in his or her executive role.

This paper will explore the potential use of professional roles and responsibilities of executive directors, especially human resources and marketing, on the boards of public companies to represent wider stakeholder interests. In the case of human resources and marketing, employee welfare and rights and consumer/buyer relationships could be represented at board level by executive directors. …

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