Featured Article – 2007 March
An Introduction To Advisory Boards
by Mill Brown
Mill Brown is Managing Director of the Atlanta office of Beane Associates, Inc., and a seasoned business professional with over 30 years experience developing and implementing crisis and change management for public and private companies.
Whether a business is poised to grow, trying to stabilize itself or set a new direction, there are times when it takes more than collaboration between the board of directors and the top management team to make great things happen. Sometimes, a business needs a new perspective, an unbiased assessment by talented leaders and executives who have a proven record of success in their own businesses. In the case of distressed businesses, continued fresh advice from outsiders may be the key to a successful long-term transformation of the company.
Unlike boards of directors, advisory boards don’t have any power, but they can be influential agents of change when CEOs recognize their value and are willing to listen to their advice. A good advisory board will suggest ways for a business to improve its operations and its profitability, and will guide the business to the resources—both human and financial—to make that possible.
Where To Start
When choosing members of the board, remember that you’re seeking individuals who will provide solid advice, leaders who will take a fresh look at the company’s issues, rather than offering instant agreement with the direction the company is now taking.
A typical advisory board would include experts with legal, financial and industry expertise, knowledge of sound human resources and management practices, and familiarity with any relevant specialties (engineering, marketing, international, etc.), where the company is inexperienced. Most owners and CEOs have the contacts to recruit advisors with the appropriate expertise; effective networking with other business associates should provide candidates for any remaining positions on the board.
For most businesses, five to seven members are appropriate. Your board should be large enough to bring diverse knowledge and skills to the table, but small enough to work closely together and reach consensus easily. When your board is in place, schedule regular meetings, with full agendas prepared and minutes taken. In our experience, a quarterly meeting and an annual session for strategic planning constitutes an effective yearly schedule. Give the board full access to the company’s financial information. Expect the advisory board to deliver an honest and diverse perspective on critical issues; empower the board to give you the answers to tough questions confronting the business, including the contributions of key management personnel and how to improve performance to plan.
Whether management specifies the topics for the advisory board to consider or gives it a broader rein, recognize that a talented advisory team can suggest moving the business in ways they hadn’t previously been considered.
At the end of the day, that’s the benefit of having a good group of advisors: they have the freedom to guide you in directions you never thought possible, and they may also point you to the resources you need to solve problems and achieve new goals.