Board of Directors Vs Advisory Board Leave a comment

A company’s advisory board can assist in addressing business needs and establishing long-term strategies. Effective advisory board members are highly experienced individuals who can bring their expertise to your business and offer advice leadership. They are well-versed in the field they work in and have backgrounds in professional fields such as law, finance or marketing. Advisory boards are typically made up of volunteers that want to help you. They could be members of the board or recruiters from outside. They meet regularly or semi-regularly, usually 6-8 times a year. They may be mentors for the CEO and the leadership team.

Typically, members of an advisory council are not paid for their time, but reimbursed for meeting expenses. In addition the size of an advisory board can be adapted and makes it easy to create and expand depending on the needs of the business. Additionally, an advisory board can be more informal than a traditional board of directors, which helps reduce risk of liability.

It is important that companies establish clear boundaries for their advisory board to ensure that members don’t begin acting like a board of directors and assume all the liabilities. This can be done by writing a formal explanation of the advisory board’s duties, such as through an executive resolution or in their bylaws. This will make it easy to hold them accountable and avoid confusion. As a business expands it’s not uncommon for advisory roles to be more formalized and eventually become an entire board of directors. This typically happens when acquiring investors or reaching a certain scale in operations.

https://theirboard.com/what-it-takes-to-be-an-effective-board-member/