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What is an Advisory Board and why does an organization need one?

Vi Cao

Vi Cao

What is an advisory board and why does an organization need one?

In today’s complex business environment, having smart strategies and proper feedback can be the deciding factor between success and failure. That’s why the Advisory board has become an indispensable part of modern organizational structure. So, what exactly is an Advisory board? This article aims to dispel any doubts you may have about this department.

The Advisory board is not just a group of advisors; they are strategic consultants, providing deep insights and multifaceted perspectives on the market and business opportunities. With their flexibility and professionalism, the Advisory board serves not only as a crucial advisory source but also as a source of encouragement and shaping for the sustainable development of the business.

What is an Advisory Board?

What is an advisory board?

Advisory Board is an organization created to engage with external advisors. Its primary function is to advise and support the owners, directors, or shareholders of a company or organization.

Playing a vital role in expanding business operations, Advisory Boards are commonly utilized in startups, international corporations, non-profit organizations, academia, and even governments. An effective advisory organization often applies best practices, aiding members in scrutinizing and developing strategic thinking, as well as accessing specialized knowledge or critical relationships.

The name of an Advisory board may vary depending on its purpose and scope. Some common examples include the Board of Directors, Project Board, Business Advisory Board, Advisory Group, and Advisory Committee… This demonstrates the flexibility and diversity in how Advisory boards are structured and named.

Advisory Board responsibilities: What does an Advisory Board do?

Advisory board responsibilities: What does an advisory board do? 

Advisory Boards are crucial in providing insights and advice to address business challenges or explore new opportunities. The primary purpose of most Advisory Boards is to foster high-quality and in-depth conversations, aiming to offer fresh perspectives and thorough analysis of issues or opportunities.

Thanks to their flexibility, Advisory Boards can adjust their scope or “terms of reference” and their roles to fit the specific needs of a business. The roles, responsibilities, and expectations are often outlined in the Advisory Board’s charter and procedures within their organizational structure. This ensures the effectiveness and alignment of Advisory Board operations with the specific goals and scope of the organization.

Benefits of an Advisory Board

Benefits of an Advisory Board

Advisory Board is an organization that provides non-binding strategic advice to an organization. Established with the participation of accomplished experts, the Advisory Board helps accelerate the company’s progress and avoid common risks. The benefits of having an Advisory Board include:

Building Trust

Having a strong Advisory Board can significantly contribute to building trust and credibility in the market. With reputable and experienced experts on board, you can establish a positive reputation and gain the confidence of stakeholders.

This not only helps create a favorable impression among those interested in your company but also increases business opportunities and future collaborations. The presence of reliable experts on your Advisory Board can boost the confidence and trust of potential investors and customers in your company’s potential and success, helping you attract and retain key business partners.

Valuable Advice from the Board of Directors

Members of the Advisory Board can provide valuable advice to help you navigate complex situations and develop business strategies. The diversity of expertise ensures comprehensive and high-quality advice.

Personal Development

Relationships with members of the Advisory Board can develop into personal mentoring relationships, helping you develop yourself as an entrepreneur and leader.


Advisory Board members can introduce you to important and influential individuals in your field. These relationships can bring business opportunities and support the company’s growth.

Advisory Board vs Board of Directors

Advisory Board vs Board of Directors

Now let’s compare the Board of Directors and the Advisory Board to highlight the key differences between these two organizations:

Legal Authority

• The Board of Directors has legal authority, legal responsibility, and delegation power over the organization.

• On the other hand, the Advisory Board does not have any legal authority or obligations.

Decision Making

• Members of the Board of Directors have the authority to make decisions that the company must comply with.

• The Advisory Board only provides non-binding recommendations, and company leadership may choose to follow or disregard them.


• The Board of Directors exercises control over critical decisions of the company, including the appointment of the CEO, financial matters, and strategic direction.

• The Advisory Board solely serves in an advisory capacity, providing insights and recommendations without control.


• The Board of Directors is a highly formal organization, structured, and compliant with legal requirements.

• The Advisory Board is less formal and more flexible in its operations.

This highlights the difference in roles and responsibilities between the Board of Directors and the Advisory Board within an organization.

Difference between the Steering Committee and Advisory Board

Difference between the Steering Committee and Advisory Board

The difference between a Steering Committee and an Advisory Board lies primarily in their roles, functions, and levels of authority within an organization:

Purpose and Focus

Steering Committee: Typically focuses on guiding and overseeing the execution of specific projects, initiatives, or programs within an organization. It provides strategic direction, ensures alignment with organizational goals, and monitors progress.

Advisory Board: Primarily serves as a source of expertise and advice for the organization’s leadership, offering insights and recommendations on broader strategic matters, long-term planning, and overall organizational direction. It may not have direct oversight of specific projects or initiatives.

Authority and Decision-making

Steering Committee: Often has decision-making authority related to the specific projects or initiatives it oversees. Its members may be responsible for making key strategic decisions and resolving issues within the scope of their assigned projects.

Advisory Board: Typically does not have decision-making authority within the organization. Instead, it offers recommendations and guidance to the organization’s leadership, who ultimately retain decision-making power.


Steering Committee: Comprised of individuals with relevant expertise and stakeholders directly involved in the projects or initiatives it oversees. Members may include project managers, department heads, and key stakeholders.

Advisory Board: Consists of external experts, industry leaders, and individuals with diverse backgrounds and experiences relevant to the organization’s mission and strategic goals. Members are often appointed based on their ability to offer valuable insights and perspectives.

Role in Governance

Steering Committee: Typically operates within the existing governance structure of the organization, reporting to higher-level decision-making bodies such as the executive leadership team or the board of directors.

Advisory Board: May or may not have a formal role in the organization’s governance structure. While it provides valuable advice and guidance to organizational leaders, it generally does not have direct governance responsibilities.

Overall, while both the Steering Committee and Advisory Board play important roles in providing guidance and support to organizations, the Steering Committee tends to focus on project-specific oversight and decision-making, whereas the Advisory Board offers broader strategic advice and expertise to inform organizational direction.

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