Board of Directors Vs Advisory Board
There are some differences between an advisory board and a board of director, even though they both offer a lot of value to an company. Boards are accountable for supervision, governance and direction of an organization, while an advisory board can offer strategic business insights through experience and knowledge. A board of directors is bound by certain legal obligations that require them adhere with certain guidelines and policies. A advisory board, however does not.
The definition of the role of an advisory board is a must when it’s created. This will help avoid confusion and ensure that the organisation gets the most benefit of its advisory board members. This will also help minimize the liability exposure of the members of the advisory board, and their families. It’s best to record this clarification in a manner, whether it’s the form of a written agreement, board resolution or company policy.
It is beneficial to have a specific goal in mind for instance, an organization wishes to establish an advisory board to serve purposes of strategic importance. This could be something as simple as identifying a group that an organization may not be able to work with or as complicated as providing insight into business for an individual project.
A mix of people who are relevant to the goals of the company should constitute an advisory board. This could include former volunteers and members of the board of directors or experts from outside. When selecting members, the organization must be aware of the individual’s abilities as well as their knowledge of the industry and level of interest in its mission. It’s also important to determine if the member is able to commit to regular meetings.