How the roles of owner, board and management team work in a company!

What is the difference between the roles of owner, board and management team in a company?

 

In a company, the owner, the board and the management team all play important roles, but their responsibilities and perspectives differ significantly. To understand how these different levels interact to drive a business forward, we need to start by examining their legal roles under the Swedish Companies Act (2005:551).

 

Owners: Visionaries and Investors

The owners of a company, those who hold shares, are its backbone. According to the Companies Act, owners have the right to participate in general meetings and make decisions on the company's most important issues. Their main purpose is to ensure that their investment yields a return and that the company is steered in a direction consistent with their long-term vision.

At general meetings, shareholders discuss the company's financial situation, risks and values. They also appoint the board of directors, which is a critical decision as the board is responsible for implementing the owners' strategic objectives and overseeing the company's operations. Owners' directives are issued to guide the way the company is run, acting as an important link between the owners' vision and the operational activities.

 

Board of Directors: Strategists

The Board of Directors, appointed by the owners, is responsible for the overall management of the company. Their role is strategic: they ensure that the company has a clear direction and that this direction is in line with the owners' directives. The board meets regularly to review and approve the strategic plan, as well as to monitor the company's financial objectives and control its operations.

The board's work is crucial in translating the owners' visions into concrete plans. By managing risks, ensuring the integrity of the company's accounts and monitoring the financial situation, the board acts as a safeguard to keep the company on track.

 

CEO and Management Team: From Strategy to Reality

The CEO, appointed by the Board of Directors, is responsible for the day-to-day management of the company. The CEO must ensure that the strategic plans are implemented and that the company achieves its operational objectives. This involves a constant balancing act between following the board's guidelines and being flexible enough to adapt to changes and new challenges in day-to-day operations.

The management team, often consisting of the CEO and other senior managers, plays an important supporting role. Together with the CEO, they are responsible for ensuring that all departments within the company are working towards the same goals and that the strategy is implemented effectively. They also manage budgets, follow-ups and operational decisions, which requires a pragmatic and hands-on approach.

 

For example

To clarify these roles, we can look at an example:

• Owner: Decides that the company should expand into a new market. Their focus is on the long-term opportunities and risks of such expansion.
• Board of Directors: Develops a strategic plan for how the expansion will take place. They set targets and oversee that financial resources are managed effectively to support the expansion.
• CEO and Management Team: Implement the strategic plan. They create an action plan, manage budgets, and follow up with regular meetings to ensure the expansion is on track.Implement the strategic plan. They create an action plan, manage budgets, and follow up with regular meetings to ensure the expansion is on track.

By understanding and respecting these different levels and their specific roles, companies can navigate complex challenges and strive for long-term success. Each level - from owner to management team - brings unique perspectives and skills that together shape the company's future.