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What is a Board of Trustees?

In today’s business world, there are many management models that are popular with companies. At the same time, the variety of such management models also affects the availability of certain management structures. If the board of directors no longer surprises anyone and attracts more and more fans around the world, the presence of the board of trustees in the management of the company may still cause some doubts. We suggest you learn a bit more about what a board of trustees is, what models of management it is for, and what its role in the management process is.

 

What is a board of trustees?

The board of trustees is one of the managing units, the purpose of which is the general supervision of the management decisions of the company. It can be called a kind of intermediary, which supervises the general process of making decisions, important for the life of the company, as well as ensuring that any management decision takes into account the interests of all employees of the company.

Despite the fact that the Board of Trustees is similar in its structure to the Board of Directors, you should not confuse the two governing structures. The board of trustees may include board members as well as outside experts whose role is to oversee and advise all levels of the company’s internal management. Executive board members may sometimes serve on the board of trustees to ensure the effectiveness of the decision-making process.

 

What is the role of the board of trustees in decision-making?

Most people typically associate the Board of Trustees with various charitable and educational foundations. And this is not surprising, because having a board of trustees is more common for nonprofit organizations. This fact also affects the system of remuneration for the members of the board of trustees – they may receive a salary from the company’s budget, or work on a voluntary basis.

Nevertheless, the functions of the board of trustees in such organizations are quite clear and are defined by legislative norms. Most often, the duties of the members of the board of trustees include:

  • Overseeing the making of effective decisions for the benefit of the company as a whole, not just its individual business units;
  • Supervising the disposition of the company’s assets according to the articles of association and the company’s approved development strategies;
  • Assist in the selection of an appropriate talent pool;
  • Participation in the development of strategic planning for the company’s development, and much more.

This list of functions of the board of trustees is far from exhaustive. The specific responsibilities of the Trustees are usually spelled out in the Charter of the organization.

It may seem that the board of trustees is in many ways similar to the board of directors in its activities. However, there are some key differences between them. In the first place, it is worth remembering that members of the board of trustees have a great responsibility to shareholders and employees of the company, and the main emphasis in their work is on the legitimacy and openness of the company, regardless of external circumstances.

 

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