Board of Directors Vs Advisory Board August 30, 2023
There are differences between a advisory board and a board of directors in spite of the fact that both bring a lot of value to an organisation. Boards are responsible for the governance, control and direction of an organization. On the other hand, advisory boards can provide strategic business insight from their experience and knowledge. A board of directors is bound by specific legal obligations that require them to comply with specific policies and guidelines. An advisory board, on the other hand, does not.
The purpose of an advisory board is essential when it’s created. This will eliminate confusion and ensure that an organisation gets the most benefit of its advisory board members. It also helps reduce the risk of liability for the advisory board as well as its members. It’s a good idea document this clarification in some way, whether through an agreement in writing, a corporate policy or board resolution.
For example when an organization is planning to create an advisory board for strategic reasons it is helpful to have a clear objective in mind. This could be something as simple as identifying an individual that an organization may be unable to get involved with or as complex as providing business analysis for an individual project.
A mix of people who are relevant to the goal of the organization should be forming an advisory board. This could include former volunteers or members of the board of directors, or experts from outside. When selecting members organisations should take into consideration the skills of the person, their experience in their field and the level of interest in their mission. It is also crucial to determine whether the member is able to commit to attending regular meetings.