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Implementing value and profit generation models are the main tasks of the board and the CEO. The main task of the board is to develop the value of the company in favour of the shareholder (value generation model). The main task of the CEO is to obtain such results for the company that an increase in value is possible (profit generation model). The value generation model is a plan through which the value of the company will be increased. Factors affecting value are specific for each company, the most influential ones being results measured by money, growth and the development of the company. The board controls and supervises the activities of the company, and supports the management in the actions implemented for increasing the value of the company. The board provides the management a framework for doing the work. The profit generation model is a logical plan to make the company profitable; it is a plan for generating good results. The economical result measures the growth and the development of the company (value development). The profit generation model is company-specific even though often some core items like sales margins, operating margins, and productivity are emphasized. The CEO is employed to generate good results and is the expert of the profit generation model. The CEO needs to understand the value generation model of the company without intervening in it other than for that purpose for which he has been employed - to generate results. Opinions regarding the future, and information related to the stock exchange are for the board to take care of (as they influence the value of the company). The board has to be able to manage, understand and clearly see what the profit generation model of the company is, for which they have employed the CEO. The board should follow thoroughly and transparently the development of elements related to the profit generation model. The board has to intervene in anything that is a risk for the result or solidity of the company. |
