The structure of a Board of Directors (BOD) or board of trustees is one of the most crucial factors in determining an organisation’s success. A well-organized Board will make sure that each member understands their role and how they can complete it. It can also help the organization or company to achieve its goals.
The board is essentially accountable for overseeing the executive board and determining the overall direction of the company. The board is also accountable for the hiring and firing of CEOs, determining CEO pay, determining the compensation of other executives in the company, and making important strategic decisions.
External or independent directors are members of a board who do not hold executive positions within the company and can be paid a fee for their involvement. They offer different perspectives to the board, and are often subject-area specialists in the field that the company operates within.
A two-tiered board consists of an executive board comprised of executives from the company and a supervisory board which is comprised of directors who are independent. The supervisory board is accountable for making sure that the management board’s operations are carried out in accordance to corporate laws and policies.
A consultative or advisory board consists of individuals who have vested interests in the business like customers or investors. The advisors can provide insight to the top executives of a company, and provide different perspectives that may not be available within the organization itself. They can also help to identify potential growth opportunities and assist with the implementation strategies that meet a company’s goals.