The structure of the Board of Directors or Board of Trustees is one of most important elements that determine the future of an organization or company’s success. A well-structured Board will ensure that each member understands their role and how they can fulfill it. It can also help the organization or business achieve its goals.
In essence, the board supervises the executive board of the company or organization and sets the direction for the company. It is also responsible for the selection and removal of a CEO, setting the compensation for CEOs, determining the pay for other executives within the company, and making crucial strategic decisions.
External or independent directors are compensated for their participation. They are non-executive board members that do not hold executive positions within the company. They provide different perspectives to the board, and are often subject-area specialists in the field that the company is operating in.
A two-tiered board comprises of a management committee comprised of executives from the company, and a supervisory council comprised of directors who are independent. The supervisory board ensures that the management board is operating in conformity with corporate policies as well as laws.
An advisory or consultative board is composed of people with vested interests in the company like customers or investors. Advisors can provide advice to the top executives and provide new perspectives that aren’t available within the company. They can also assist in finding growth opportunities and help with the implementation of strategies to achieve the company’s goals.
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