A board is:
A board can help grow and develop at a pace that suits the owner, staying inside the speed limits, or accelerating to full throttle.
Governance applies to all companies, but not all in the same way. There is no set route to follow, but most companies face similar issues, such as:
Both advisory boards and boards of directors should have a similar structure – a chair to facilitate, and formal procedures for conducting meetings.
Since the late 1990s, management and IT consulting business Maven has grown to 37 consultants across New Zealand – and now they're setting their sights on new opportunities offshore. Maven used good governance to get ahead.
An effective company must ensure the relationship between the board and management is complimentary rather than adversarial. This is one of the most important relationships within a company, so make sure it is well managed.
It's easy to get confused with the difference between governance and management. The board is in charge of governance of a company which seeks to ensure the smooth running of a business by making accountability and oversight the core of their workings. Governance also ensures that the business has a future-facing strategic plan.
This is where management comes in. They take the strategic plan and work to implement it into the day-to-day operations of the company.
The difference can get blurred with start-ups and high growth businesses when:
Executive directors need to think about the hat they have on:
This is where an independent director can help guide your board discussion, and make this delineation clearer.
An advisory board is a committee of people selected by a business (or a board in the case of larger companies) to provide defined advice and information in an informal and flexible manner.
Advisory board members are not directors, have no powers and owe no duties as directors of the company. The key differentiator is that an advisory board advises only. It has no power of decision making and cannot instruct the company to act.
Effective advisory boards provide strategic and compliance guidance and know-how that is contextualised to the needs of a business in a range of business settings.
There are a number of reasons why you might have an advisory board.
Start-ups and businesses in the high growth sector can particularly benefit from the guidance of an advisory board which can be used as a business development tool and adjunct to strategic planning.
Larger companies that already have a board of directors may also set up advisory boards for a number of reasons – whether it’s to work on a particular project or deal, bring a fresh perspective to an issue, or provide particular expertise in a specific field relevant to the company.
To take the next step towards setting up an advisory board, see the Advisory board toolkit.
A formal board of directors has major responsibilities and legal obligations. They are:
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