by Granville Triumph
There might be an individual in every company who provides the leadership and vision that makes an organization great, but even the world’s most successful leaders and visionaries need counsel from trusted advisors in order to achieve greatness.
An advisory board is a group of people who advise the chief executive of an organization. Unlike a board of directors, members of the advisory board have no formal responsibilities within the organization and may not vote on organizational matters. In larger organizations, advisory board members may be compensated for their time and expertise. However, the benefits of being an advisory board member are more often tied to personal loyalty, an expanded professional network and exposure to new ideas and perspectives.
Advisory boards exist because one person doesn’t have all of the answers. Instead of seeking advice from various confidants as issues arise, an advisory board provides advice on a regular basis in a more formal, structured setting. Members are usually chosen based on their areas of expertise, which often include law, finance, marketing and human resources. This gives an organization’s chief executive access to a deep pool of knowledge from people who have no personal agenda within the organization.
An advisory board also provides a safe harbor for executives to present and discuss ideas and initiatives before making more formal presentations to a board of directors and other stakeholders who evaluate the executives and determine their compensation. This allows executives to get feedback from a group of experts, fine-tune their ideas and make more effective decisions.
With an advisory board, these discussions occur in a more open forum compared to more formal board meeting procedures. Because a board of directors may include customers who are also competitors, it can be difficult to candidly discuss issues related to customer competition. This dynamic doesn’t exist on an advisory board. Any topic can be discussed without the worry of ruffling someone’s feathers.
If the executive needs advice on an issue related to one aspect of the organization, an advisory board has the ability to focus their advice only on that part of the organization, whereas a board of directors must consider its impact on the organization as a whole. Similarly, the executive can meet with the entire advisory board or consult with an individual member depending upon the issue at hand.
How you structure your advisory board and its meetings should be based upon your business needs and your needs as an executive. Tell your advisors what your expectations are and what kind of commitment is involved. By leveraging your advisory board’s expertise and insight, you can set the course for your organization’s long-term success.