The structure of the Board of Directors or Board of Trustees is among the most important factors that determine the future of a business or organization’s success. A well-organized Board will ensure that each member knows their role and how to fulfill it. It also assists the organization or business reach its desired goals.
The board is essentially the executive board of the company or organization and sets the overall direction for the firm. It is also accountable for the hiring and firing of a CEO, setting the compensation for CEOs, determining the pay for other executives in the company, and taking crucial strategic decisions.
External or independent directors are non-executive members of a board that do not hold executive positions in the business and can be paid a fee for their participation. They provide different perspectives to the board, and are typically subject-area experts within the industry that the company operates in.
A two-tier board comprises a management board composed of company executives, and a supervisory board comprised of independent directors. The supervisory board ensures that the management board operates in compliance with corporate policies and laws.
A advisory or consultative board is made up of those who have a stake in the company. This includes investors or customers. The advisors are able to provide insight to the top executives of a company, and provide perspectives that might not be available within the company itself. They can also assist in finding growth opportunities and assist with the development of strategies to achieve the goals of the company.