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The distinction between a board of directors and an advisory board is often misunderstood especially when those involved aren’t well-informed about the subject. The confusion could result from common terms (both boards are known as “the board”), an absence of clear information about the responsibilities of an advisory board in a company’s rules or bylaws as well as a difference in the fiduciary duties.

A board of directors is the control body of an organization and has the ability to take a vote on major decisions, including replacing the CEO or making changes in the executive management team. They can also make management accountable for its actions. Board members have an obligation of fiduciary towards the company and could be legally accountable in the event that they fail to meet the requirements of this standard.

Advisory boards, on the other hand, offer advice to a business and its leadership. They might be able to recommend specific changes or initiatives however it’s ultimately the business’s management whether or not they follow the advice of the advisory board.

Typically an advisory board will comprise of seasoned third parties who have a wide range of industry knowledge and connections. The members of the advisory board will help the company stay in the forefront of developments and offer suggestions that will help the company to grow. This can be as simple as streamlining customer service in line with recent buying behavior or as complicated as establishing the new strategy to support global expansion.

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