Board of Directors Vs Advisory Board

Boards of directors are crucial to the success of an organisation However, they have a few important distinctions. According to a recent piece by board expert Marissa Levin the main difference between a board of directors and an advisory board is that a board has fiduciary duties, while an advisory board doesn’t. A board of directors is legally responsible for all decisions they make and must take into account the impact of their decisions on the performance of a company.

Although boards do not have fiduciary duties, it is still important for a company to take read the article into consideration the consequences of their recommendations before implementing them. If a CEO follows any recommendation of an advisory board and it is detrimental to the business, the members of that advisory board may be sued for negligence.

To avoid this, organizations should ensure that their advisory board is provided with a clear written clarification of its role in a resolution of the board or any other document before they begin recruiting members. It is also possible to state that advisory boards do not have any legal responsibility and is not a board of directors in the company’s bylaws or written explanation provided by the CEO.

It’s also wise for a company to establish an evaluation policy for its advisory boards that include objectives and the scope of the assessment. Whether it’s an advisory board or a regular board of directors, creating clear guidelines and goals for evaluations will help to ensure that the board receives the maximum value from its members.