Author: Florentina Șușnea, Managing Partner, PKF Finconta
In Romania, addressing a topic such as the board of advisors is not simple. From translating the English term into adapting it to the business practice. Semantic reflexes and the local business culture do not seem to stay on our side. And yet, under the impact of globalization and the spread of new business models, the subject demands a timely necessity.
The increasingly competitive business environment forces companies to explore growth options. In brief, they can be of two kinds: 1. urgently-operational as actions or 2. strategically-oriented as decisions. Of this second category is also the advisory council. Its role is to guide, consult and advise the CEO and management teamon the direction of company development.
Unlike the well-known formal meeting of the board of directors, made up of business units / departmental directors, in the case of the advisory council the role is an informal one and the composition thereof consists of people with seniority and experience in different areas of expertise.
Boad of directors vs. board of advisors
Unlike the board of directors, where each member is elected by shareholders and has legally defined responsibilities that are complemented by internal regulations, the board of advisors is relatively easy to form. It does not legally anchor the counselors and benefits of the experience of the board members to grow the business. The advisors are elected personally by the CEO and the management team. Their number may increase or decrease because they can easily be replaced as the needs of the company evolve.
An advisory board costs less
The members of the board of directors receive an important remuneration and can be held accountable for committing any errors. Advisors can not be held accountable and are therefore not paid to the same extent. The most common forms of reward for the contribution made consist of shares within the company or a small remuneration.
Advisors are most often found in startups or small companies, in which case their contribution is voluntary and is sometimes rewarded only with the gratitude of the entrepreneurs.
Advisors help because either they have personal affinities with the entrepreneur they help, or they like the mission of the business for which they advise. Meetings with advisors are simple, informal and easy. The approach is high level and gives entrepreneurs a strategic picture.
Priorities and responsibilities
The legal basis for working with the board of directors imposes the priority of the organization's and its shareholders' needs on the needs of employees. Instead, the board of advisors does not have such a duty on the company; directing, mentoring and advising the CEO and the management team is its top priority.
Setting up an board is an opportunity for many business categories and should not be considered as a hassle. This approach is a rare opportunity for companies to build a qualified team of loyal mentors to support with pertinent advices the development of the company. Creating an advisory board for entrepreneurial companies is an opportunity for accelerated growth by accessing the experience of experienced managers and professionals.
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About PKF Finconta
For more than 24 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF FincontaConsultanta, PKF Finconta HR and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping and accounting advisory services, transfer pricing, payroll and personnel administration, and insolvency.