The structure of the Board of Directors or Board of Trustees is among the most important factors that determines the future of a company or organization’s success. A well-organized Board will ensure that each member understands their role and how they can complete it. It will also help the organization or company to reach its desired goals.
The board is essentially the executive board of a company or a group and sets the overall direction for the company. The board is also accountable for the hiring and firing of CEOs, determining CEO pay, determining the compensation of other executives within the company, and making important strategic decisions.
External or independent directors are paid for their participation. They are non-executive directors who do not hold executive positions within the company. They bring a variety of perspectives to the board and are usually subject-area experts in the industry that the company operates in.
A two-tiered board consists of an executive board comprised of executives from the company, and a supervisory board which is composed of directors who are independent. The supervisory board ensures that the management board is operating in conformity with corporate policies and laws.
A consultative or advisory board is composed of individuals with vested interests in the company including investors or customers. They can provide insights to the top executives of a company, and provide different perspectives that may not be available within the organization itself. They can also assist with discovering growth opportunities and assist with the development of strategies that meet the goals of the company.