Director FAQs and Essentials

The Role of the Board vs. the Role of Management

By NACD Staff


First-time Director Board-Management Relationship Director FAQ Board Operations

As the corporation’s ultimate decision-making body, the board of directors has both an oversight role (overseeing management on behalf of shareholders and other constituencies) and an advisory role (advising management), with limited involvement in everyday company operations.

This memo provides information on unitary or single-tier boards of directors. For recent guidance on Germany’s dual board structure, see David Block and Anne-Marie Gerstner, “One-Tier vs. Two-Tier Board Structure: A Comparison Between the United States and Germany.” NACD’s founding president, John Nash, coined the term “nose in, fingers out” (NIFO) to capture this important distinction between observation and advice, versus action. By contrast, members of management are full-time company employees whose main responsibility is to operate the company. This memo explores the differences and overlaps between the roles of directors and managers in for-profit enterprises.

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