What is an advisory Board?
An Advisory Board is an informal panel of experienced professionals who give non-binding strategic and tactical recommendations for the founders, owners and leaders of a business or non profit organisation.
Advisory board drive value for organisation of any size, from start-up, mid-size businesses and large organisations.
It’s important to differentiate “Advisory Boards” with “Board of Directors”. Advisory Boards only offer advices and strategic recommendations. They do not have, in opposition to most board of directors, have legal authority to vote on corporate matters.They do not serve a governance function or represent shareholders or other stakeholders.
How to create your advisory boards ?
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Choosing the right Advisors
Choosing the right people for your advisory board is probably the most important task as it will often determine it’s success.
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Scheduling : When should an advisory board meet?
Because they have no governance authority or statutory responsibilities, an advisory board can be very straight forward to organise. There is no need for elections, committee structures or extensive disclosure of the advisory board’s role, remuneration or performance.
Most advisory board meet on a regular basis (Monthly for start-ups and quarterly for larger organisations or advisory board focusing on slow moving topics).
However advisory board less formal structure also allows flexibility and some organisations will consult them on an ad-hoc basis as required. For example in the face of a crisis, as a project evolves to it’s next stage or as they prepare key business moments.
Advisory boards are free to concentrate their energies and time on their core role, namely to complement the board of directors by providing specialist experience, knowledge and contacts not easily accessible elsewhere.
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Size: How many advisors should you have on your board?
For your first advisory board, our recommendation is to start small with 4 or 5 advisors max. Small boards are easier to schedule and more importantly to moderate. Every member of the board has more opportunity to express it’s opinions and strategic recommendations.
Having larger advisory boards also has it’s advantages, mainly it increases the amount of recommendations your business will benefit from and it enlarges the network you can capitalise one.
If you build an advisory board around one specific topic or area of expertise, having a larger board will add depth to the board recommendations. In opposition if you build a generalist board with different a wide range of specialities around the table, having a large board will simply increase the volume of topics covered.
In both cases, having more people around the table means giving less space to each advisors. This can have 2 negative effects: 1. Reduce the amount of information you can obtain from each advisors, potentially. if not managed well, reducing therefore it’s quality and 2. Reduce the sense of importance each board member gets that can lead to reduced implication / motivation.
Both of these potential negative effects can be avoided or minimised:
1. Preparation is key : If you or your team prepares well in advance the questions you are hoping your board will address then you make sure that each board members comes prepared to deliver recommendations in pre-defined limited amount of time.
It’s important to note here that the level of preparation you can expect from members is often directly correlated to 2 elements : 1. Their compensation 2. The level of seniority of their peers and the company representation at the board.
2. Ship love : Ensuring every-board member is receiving the right level of attention from senior leaders in the organisation
If you know that due to the amount of participants, during the meeting they wont get a chance to feel truly values, then create these moments outside the meetings. The human ego is fragile and should be taken very seriously.
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Content: What should be the content of your board