About Advisory Boards

What Type of Business Needs an Advisory Board?

Any business can benefit from the independent and expert counsel that an advisory board can provide. They are often most useful, however, when a business is poised to undergo a significant change such as a merger, acquisition, new product launch or marketing push.

What Makes For an Effective Advisory Board?

Key factors include:

• Getting the right people.   Decide what experience and what personal qualities you need. Criteria might include: a track record in your industry, a reputation for managing change, special skills such as business development or corporate finance, or personal qualities such as consensus building or conflict management, connections to government or an extensive business network. Whatever it is, set out your requirements so that you can evaluate potential candidates objectively
  
  
• Giving them the right brief.   You need to set out some terms of reference for your advisory board so that everyone is clear on how they can best contribute. You already have executive management so make sure that your advisory board doesn't meddle in day-to-day affairs. They are there as a senior sounding board, to provide robust and independent challenge, not to do the directors' jobs for them. The terms of reference will describe when and how their contributions can be made
  
  
• Following a sensible process.   One of the first things you will want to determine is the nature and frequency of advisory board meetings. Establish a standard agenda but one which also allows for changes when there are pressing topics or issues to discuss. Many advisory board members are also busy with other commitments so setting your meeting schedule for a rolling 12 months is usually a good idea. Meetings are typically every two or three months. While the board is advisory in nature, advice with no action arising from it is a waste of time, at best. You therefore need to determine how decisions are going to be made and how actions agreed in the meetings are going to be tracked. Lastly, be prepared for dissent ion, discussion and even vigorous debate. This is where the value of an advisory board can be found, in views that break with the established norm, provide alternative perspectives and constructively challenge some "sacred cows"
  
  
• Measuring their performance.   Some advisory boards are established with a single purpose ("help to penetrate the market in country X" or "help ensure our successful merger with company Y") in which case measurement of their effectiveness can be derived from how they are helping to achieve that particular goal. Other boards have a more diverse responsibility, however, and care will be needed to ensure that their contributions and their impact can be fairly assessed
  
  
• Remunerating them appropriately.   Advisory board members are usually paid a fee for attending meetings ranging from a few hundred to a few thousand dollars. Don't be constrained by this method alone, however. Other remuneration mechanisms could include equity participation, profit or revenue-based compensation, or benefits in kind. Different members may have different appetites for risk/reward sharing. Accordingly, don't feel that all your members have to be remunerated in the same way, (though it is clearly a lot simpler if they are!)
  
  

If you have an idea of the type of experience that you are looking for, you can see what sort of candidates we have available or even create a client account in order to post details of your requirements on this site.

Here's wishing you Good Governance!