Advisory Boards have become increasingly popular in recent years as a way for companies to benefit from the advice and expertise of a group of external advisors without the formal governance and legal obligations of a Board of Directors. Unlike Boards of Directors, Advisory Boards do not have any legal authority or decision-making power, but rather provide non-binding advice and guidance to the company's leadership team.
But how do you know if your company is ready for an Advisory Board? What do you need to have in place to make the most of this resource, and does the size of your company matter?
Assessing Board Readiness for a High Performance Advisory Board
When deciding to build an Advisory Board for a client, we must assess if they are ready for a board. CEOs and owners often believe that there is some magical threshold of revenue they must achieve to make building a board worthwhile. However, we determine board readiness in a different manner, particularly for a high-performing advisory board.
Here are some indicators that a company is ready for a high-performance Advisory Board:
Does the company have critical strategic issues and objectives that would benefit from experience and guidance? Is the business in a growth stage? Is it looking to enter new markets or introduce new products? Is there a succession from one generation to the next? These critical issues are not necessarily tied directly to size, although the complexity tends to increase as companies grow.
Does the company have a clear vision and strategy for where it wants to go? Before implementing an Advisory Board, you must have the foundational building blocks (values, mission, vision, strategic objectives, etc.) for two major reasons. First, this will allow the Advisory Board to provide focused advice and guidance on how to achieve the company's goals. Second, one of the best ways to attract talented board members to your company is by focusing on areas where the prospective director or advisor can add value. Top candidates are often more concerned about where the company is headed and how they can help, rather than compensation.
Is the company willing to listen to the board? CEOs and business owners fear the loss of control when they hear the word "board." In the case of a High-Performing Advisory Board, the concern around a loss of control is not as concerning as in a Board of Directors. Still, before implementing an Advisory Board, we must ensure that all critical stakeholders, including top executives, are willing to listen to feedback and take action based on the advice of the board. It has to be a priority. The company should be open to feedback and willing to work collaboratively with the board to achieve the company's goals.
Does the company have a clear understanding of what it hopes to achieve from the board? Whether it is to provide industry expertise, connections, or strategic advice, the company should have a clear idea of what it wants to get out of the relationship. In a previous article, we spoke about many ways to leverage your board for your business.
Preparing for a High Performance Advisory Board
Once a company has determined that it is ready for a board, there are several steps that it should take to prepare for this relationship. We will explore some of these steps in more detail in future articles. These include:
Defining the role of the board - The company should have a clear understanding of what it wants the board to do, what areas it will advise on, and what kind of expertise it is seeking. This will help to ensure that the board members are aligned with the company's goals and objectives.
Identifying the right board members - The company should identify individuals who have the relevant expertise and experience to help it achieve its goals. This may include industry experts, former executives, or entrepreneurs who have successfully navigated similar challenges. Take a skills based approach and don't forget about boardroom culture!
Establishing a clear structure - The company should define how often the board will meet, how long the meetings will last, and what the expectations are for attendance and participation. This will help to ensure that the board relationship is productive and effective.
Providing clear communication - The company should communicate its goals, objectives, and challenges clearly to the board.
Regardless of your company's size, if you have critical issues that require guidance and you can clearly articulate your strategic objectives and the areas where potential board members can help, and are willing to listen to board-level input, then your company may be ready for a high-performance advisory board. However, every situation with our clients has its own nuances, and we always welcome the opportunity to discuss your specific situation in more detail if you're considering establishing a high-performance board.
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