It is common for people to be confused about the distinction between an advisory board and a board of director especially if they’re not knowledgeable about it. The confusion could be due to the usage of common terms (referring to both as “the board”) and the absence of a precise, documented explanation about the role of the advisory board in the company’s bylaws or rules and a different level of fiduciary obligation.
A board of directors is the organ that runs the organization and has the ability to make major decisions, such as replacing the CEO or making changes in the executive management team. It can also make the management accountable for their actions. Board members have obligations of fiduciary responsibility to the company and are held legally responsible for their actions if they do not meet the requirements of this standard.
Advisory boards, on other hand, provide guidance to a business and its leadership. They may be able to recommend specific changes or projects however, it is ultimately up to the top management of the business to follow the advice or not.
A typical advisory board is comprised of people who are experts and have a wealth of industry knowledge. The people who serve in an advisory role can assist the business in www.theirboard.com/whats-the-difference-between-the-board-of-directors-and-an-advisory-board/ keeping abreast of the latest trends, and offer suggestions that will help it expand. It could be as simple and straightforward as streamlining customer service based on recent buying behaviors or as complex as developing the next global growth strategy.