Advisory boards offer great opportunities, not just for your company, but for the advisory board members, as well. The formation and operation of an advisory board takes time and money, but if done properly it’s worth it. First, let’s define the term “advisory board.” Call it a brain trust or anything else you wish, but it’s basically a group of professional and business people who meet regularly to review all aspects of your business and give independent critical advice.
The board should have a leader, no fewer than five members and no more than nine. The members should represent a cross-section of people with different skills and expertise. Depending on the industry, you may want members with backgrounds in human resources, manufacturing, sales, law, finance, purchasing and business development. Other considerations include geographic diversity, size of members’ companies and industry sectors.
Some believe the board should not contain representatives from competitors, customers or vendors. Carefully chosen, I think such representatives can be great additions—especially if the competitor is someone in your industry, but operating in a different part of the country.
Generally, employees should not be on the board, although they may attend a meeting to discuss a specific issue. Since you’ll want board members to speak freely, relationships among them is important. Once you’ve identified your potential members, personally call each of them to speak with them about it.
When your board has been chosen, send each member a letter appointing him or her. After all, you’ll want enough formality to show that you consider its work important. The letter should address terms of service and your overall expectations.
Since members should be paid, the letter should also address compensation. The pay need not be substantial, but should at least cover all members’ meeting attendance expenses. If your business can afford to pay something beyond that, even better! Each member should serve a term of one to three years and the terms should be staggered.
Finally, the letter should indicate what you expect from the member, including frequency of meetings (at least three times per year), attendance expectations, and preparation for and participation in the meetings. Each member should agree to confidentiality and non-interference in your relationships with your employees, customers and vendors.
Next, choose an appropriate site. Meeting in-house is always a good idea if your facility is appropriate. If you can’t do that, think through travel arrangements, food service, availability of audio-visual equipment, etc. before settling on a location.
A written agenda should be circulated well in advance and the materials necessary to address the agenda items should be well organized and sent simultaneously. The leader should set the tone— serious but not stuffy. Keep a record of the meeting, whether by formal minutes or otherwise. The length of the meeting can be from a few hours to a couple of days, depending on the agenda, the availability of the members and your company’s ability to absorb the costs.
Be sure to include time for socializing—from something as simple as snacks after the meeting to a more formal “outing.”
Remember, the board members aren’t in this for the money and it should not be just to help you. It’s a networking opportunity for them, as well. Thank them and if suggestions were made, be sure to follow up with them.
There are many other details to consider before you actually form and implement the board, so be sure to discuss this idea with your attorney and accountant. If you know others with functioning advisory boards, it can also be helpful to tap into their experience.
A Business Owner/CEO should reflect upon the past two or three years of their business and identify times when access to a brain trust would have been very helpful.
If a multi-functional advisory board could have had a significant positive impact on your business over the past couple of years, then it could possibly have a positive impact over the next few years.
Alternatively, an advisory board can be assembled to focus on a specific area of long term strategic concern. For example, you could assemble a Customer Advisory Board consisting of strategic customers to give you regular feedback on your product plans, potential policy changes, customer service changes, etc.
Alternatively, you could hire an experienced consultant to be an ongoing coach and mentor.
The bottom line is you will become a better CEO and have a more successful company if you take advantage of the wealth of experience available to you.