The structure of the Board of Directors or Board of Trustees is among the most crucial factors that determine a company’s or organization’s future success. A well-organized board will guarantee that all members understand their responsibilities and how they fulfill it, and can help set the organization or company on the path to its goals.
In essence, the board oversees the executive board of a company or organisation and determines the overall direction of the firm. The board is also responsible for the hiring and firing of the CEO, determining the CEO’s pay, determining compensation for other executives in the company, and taking important strategic decisions.
External or independent directors are non-executive members of a board that do not hold executive positions in the company and are paid a fee for their involvement. They offer different perspectives to the board and are usually subject-area experts within the industry that the company operates in.
A two-tier board includes a management board composed of company executives, and the supervisory board that is comprised of independent directors. The supervisory board ensures that the management board functions in accordance with corporate policies and laws.
A consultative or advisory board consists of people with vested interests in the company like investors or customers. Advisors can offer insight to top executives and provide different perspectives not available within the company. They can also assist in finding potential growth opportunities and assist with the implementation of strategies to meet the company’s goals.
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