Comparing Directors to Trustees
Paid directors on a board are an advisory council that hires and then supports the chief executive officer to run the company. However, a board of trustees, who are not paid, is a group who handles the rules and finances of a non-profit organization. Below is a comparison and contrast of these two groups.
Responsibilities of Directors vs. Trustees
Both of these groups hold a lot of responsibilities when it comes to the running of an organization, company or institution. Both directors and trustees have a public function to make sure the company follows the policies they establish through the hiring of an executive who sits with the board and answers to them as well. Directors are more common in companies and businesses, whereas, trustees have been established to watch over non-profits and advise their managers and executives.
A board of directors for an organization is an appointed council whose main function is to hire someone to run the company. Usually this is a chief executive officer (CEO) or a general manager (GM) and with him, the board, as well as representatives of the company including employees, create policies, goals and a mission which the CEO then deploys into the ranks of the other managers and executives. The CEO or GM are regularly evaluated by the board and if at any time the board loses confidence in their choice, that head of the company can be replaced. The board also protects the financial fitness of the company for investors and represents their interests.
Job responsibilities of a director include:
- Staying current on company needs and profits
- Mediating between directors, executives and investors
- Designing policies, plans and effective goals
- Ensuring the company always acts within ethical bounds
- Collaborating to alter strategies when necessary or due to new information
Non-profit organizations (NPO), like for profit companies, need boards as well to act as public representatives and hold the NPO in trust for the community. Members of non-profit boards are trustees and do not get paid, nor do they have anything to do with the day-to-day running of the organization. They represent donors and the community who support the work of the non-profit. The term trustee is more common within the business community than director as the term trustee better describes their function to donors and the company, as opposed to directors who have responsibilities to investors, the CEO and employees.
Job responsibilities of a trustee include:
- Ensuring the non-profit achieves the organization's goals
- Maintaining donor loyalty and community confidence
- Working to meet all laws and government regulations
- Developing the non-profit's reputation and motivations
- Engaging in strategic planning with managers and executives
Directors and trustees are normally appointed positions. Normally people do not set out to become one or the other, however, there are many related careers that require the skills that directors and trustees need, such as construction managers who run work sites and health services managers who are charged with leading clinics, hospital departments or other health provider services.