The structure of the Board of Directors or Board of Trustees is one of most important factors that determine a company’s or organization’s future success. A well-organized Board will ensure that each member understands their role and how to perform it. It also assists the company or organization to achieve its goals.
The board is principally accountable for overseeing the executive board and determining the overall direction of the company. The board is also accountable for the selection and removal of a CEO, determining CEO pay, determining the compensation of other executives within the company, and making important strategic decisions.
Directors from outside or independent may be compensated for their participation. They are non-executive board members that are not in executive positions within the company. They bring a variety of different perspectives to the board and are generally subject-area experts in the industry that the company operates in.
A two-tiered Board is comprised of a board of management comprised of executives from the company, and the supervisory council, which is comprised of independent directors. The supervisory board is accountable for ensuring that the management board’s activities are conducted in accordance to corporate laws and policies.
A consultative or advisory board consists of individuals with vested interests in the business, such as customers or investors. The advisors can provide insight to the top executives of a company and offer different perspectives that may not be offered within the company itself. They can also assist in finding growth opportunities and assist with the development of strategies to achieve the company’s objectives.