Board of Directors Structures
The structure of a Board of Directors (BOD) or board of trustees is among the most important factors in determining a company or company’s success. A well-structured Board will ensure that each member knows their role and how they can accomplish it. It can also assist the company or organization to reach its desired goals.
In essence, the board oversees the executive board of a business or a group and sets the direction for the firm. It is also accountable for the hiring and firing of the CEO, determining CEO compensation, determining compensation for other executives within the company, and making crucial strategic decisions.
Directors who are independent or external can be paid for their participation. They are non-executive members of the board who are not in executive positions within the company. They bring a variety of perspectives to the board, and are usually subject-area experts in the industry that the company is operating in.
A two-tiered board comprises of a board of management comprised of executives from the company, and a supervisory council comprised of independent directors. The supervisory board is responsible for ensuring that the management board is operating in accordance with corporate policies and laws.
A consultative or advisory board is made up of people who have a stake in the business. These include investors and customers. They can provide insights to the top executives of a business and offer different perspectives that may not be available within the company itself. They can also assist in identifying potential growth opportunities and assist in the implementation of strategies to help a company achieve its goals.
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