MANY companies create advisory boards with great intentions.
Unfortunately, they don’t always do the best job and the board becomes a burden for everyone involved, or is abandoned out of apathy and frustration. Having a clear purpose for you and your members and a plan for building and managing your board can greatly increase your chances of success and having a powerful impact on your business.
For many that have had the privilege of serving on several advisory boards over the years would testify that, in some it had been a successful and worthwhile experience while in some it had been drudgery and downright waste of time and companies’ monies.
Lately, I have been inundated by those that follow this column to unpack the difference between an advisory board and a board of directors and to also proffer some mechanism of putting together a powerful advisory board. Here are several recommended considerations that can help drive success.
Board of advisors and a board of directors
People often get these confused. Generally, a board of directors has some sort of fiduciary responsibility to investors and/or shareholders in a company. They are there to protect the constituency they represent and generally have voting rights in high-level decisions and have some control over management.
Boards of advisors do not have this type of responsibility and power.
Advisors are there to provide insights, resources, opinions, and perspectives to leadership and management. Making sure you and your board understand this is an important first step. Confusing these can mean that you’re using your advisory board in the wrong way.
It can also mean that you’re not getting the right people or the people you want on your board because they are turned off out of concern for legal risk (board or directors usually, or at least should, be insured and protected/indemnified against litigation liability).
Advisory boards can serve many purposes. Some boards provide information about industry or markets, other boards know about operations and management, and others provide access to key resources and external credibilities. These are different purposes. Being clear with yourself so you can be clear with board members is important. What you choose as a focus depends on you and your business.
I usually suggest leaders to identify where they are weakest and where a board could have the most impact and focus on that intersection. Look at your current strengths and weaknesses.
If you don’t have much experience with finances and operations, focus your board on finding people with that experience in your industry. Picking a specific focus will help you find and select members and get the most out of their involvement.
First, I generally suggest companies don’t offer equity for board members. It’s too complicated and leads to problems if you need to end a relationship. Further, I also suggest that you don’t focus on monetary compensation to start with. (I do suggest you cover any and all expenses and, if appropriate, a small honorarium.) Equity and money miss the opportunity to appeal to a member’s desire for more intrinsic rewards such as community, reputation, and the satisfaction of helping a meaningful cause. Don’t underestimate the value you can offer advisors. Think about things like reputation, networking, and industry insights.
The more you can think out of the box on value, the more options you’ll have to recruit.
Decide meeting timelines
It is important to have a clear plan for when and how you engage your board. Generally, boards meet as a group on a regular basis.
However, you might want one-on-one time with some or all advisors separately. Think about the benefits of each and what will serve you best. Timing can be anywhere from monthly to annually.
Generally, I suggest quarterly meetings as that gives a good balance between seeing your board too often and not having anything to really discuss and too infrequently and not receiving enough input on key decisions. Some boards alternate between meeting in person and through video conference to ease travel time and costs.
Develop and publish an agenda for your board meetings.
The one thing that demoralises a board is the feeling that their time is not being used efficiently. Know what you want to discuss and what input you want from members. Provide sufficient background and details prior to the meeting with enough time for board members to review. I suggest at least two weeks in advance. You want to spend your board time discussing and working out ideas, not reading documents and presenting background materials.
Decide who interacts with board
Some companies I work with set up an advisory board just for the owner(s) of the business. Others include several members of the management team and senior staff in board meetings. Either is fine, but it’s important to work out the logic and logistics beforehand and set expectations for both the board and the company. Consider why you have an advisory board and what you expect to get out of it. If you want to focus on operations and delivery, you probably need members of your operating team involved.
If you’re more focused on long-term strategy, you might not. You can also pull in key managers to discuss specific topics. If minutes are being distributed, it might change what advisors are willing to say and you don’t want there to be any miscommunications.
Robert Mandeya is a senior executive training consultant and communication in management advisor, a personal coach in leadership and professional development with the Institute of Leadership Research and Development. Email: firstname.lastname@example.org, email@example.com.