This is a common question, what is the difference between an advisory board and a board of directors.  Here are the five primary differences.

1. Are you liable? Directors are voted on to the board by the stockholders and are held liable for their decisions.  Advisors are appointed by the CEO.  Advisors don’t make decisions they advise so generally they have no liability.
2. Do you decide or recommend? Directors decide, advisors recommend.  The CEO must follow the decision of the directors while he can ignore the recommendations of the advisors.
3. Who do you work for? A director “works for” the stockholders” while an advisor “works for” the CEO.
4. Who hires & fires the CEO? One of the responsibilities of the directors is the hiring, evaluating and if necessary firing the CEO.  The advisors have no such responsibility.  Advisors may provide feedback on the CEO’s performance but it has no impact on whether the CEO keeps his job.
5. Who can the CEO fire? Much as I am sure a CEO may wish from time to time, he can’t fire his directors.  Only the stockholders can.  Advisors can be fired at any time by the CEO, the person who hired them.

Want to know more about establishing an advisory board?  Check out the Advisory Board Kit.