An example of a Committee (Board of Directors)

A board of directors is the supreme governing body of a corporation. It is a permanent and legally required committee. The C.E.O. in any organization is accountable to the board and serves at the pleasure of the board. Sometimes majority shareholders do serve on the board with the largest shareholder probably serving as the chairperson to the board.

The operation of the board should be such that it aims to achieve key objectives. Outsiders to the firm are more objective board members than insiders and they can offer significant observations and criticism.

Responsibilities

(a) Obey the provisions of the corporate charter—which stipulates the authorized activities for that corporation.
(b) Avoid conflicts of interest e.g. collusion in price setting by sitting on boards of competitive companies.
(c) Elect corporate officers e.g. the managing director or the C.E.O.
(d) Decide on key financial matters (investments).
(e) Give broad direction to the enterprise.
(f) Maintain the survival or community of the firm.

Advantages of Group Decision Making

(a) Use of groups in decision-making tends to lead to higher quality decisions than a single individual working alone might have obtained.
(b) More information is available to the group than is available to an individual—members have varying experiences, education and qualifications.
(c) A group is likely to generate more alternatives—so each person may have their own differing ideas.
(d) Acceptance of the decision will probably be greater than it would be if an individual made the decision alone—it involves an element of democracy.

Disadvantages

(a)    Groups tend to take longer to reach a decision, because all members may wait to discuss every aspect of the decision.

(b)    The group may try too hard to compromise to the exclusion of a superior decision that the group could have attained with more effort.

(c)    A single individual may dominate the process—setting aside all the potential advantages of group decision-making.

(d)    Groups may succumb to group think i.e. become interested in maintaining cohesiveness and good feelings towards one another and lose sight of the groups original goals.

(e)    Here the group makes decisions that protect its members and individuals and the group as a whole rather than decisions that are in the best interest of the overall organization.