ABSTRACT
How do effective directors ensure that the organisations they serve have the right purpose?
Based on a framework of global corporate governance best practice, which can be used in all organisations anywhere in the world, this chapter of Questions To Ask (QTA) in the boardroom gives a high-level but succinct introduction to organisational purpose.
Long-term disruptions have forced organisations to consider why they are here, whether they can exist in future, and if so, what their long-term purpose is. The widely accepted historical view was that companies were independent entities whose main purpose must be on maximising profits for “the owners,” specifically by creating “shareholder value.” However, this belief has been eroded by the growing public realisation that all companies exist only with the consent of their stakeholders. Furthermore, organisations can no longer be seen by their boards as divorced from their social, environmental, economic, and political environments, and boards increasingly need to balance all of these in their decision-taking.
The chapter’s introduction leads into the key Questions To Ask in the boardroom, giving the reader further insight into this evolved definition of purpose requiring new board mindsets.
