Advisory Boards It's Not One Size Fits All
Sydney Outsourced CFO Thomas Taylor - Saturday, January 17, 2015
I believe that very few people can build a great business alone, and whether you are a start-up or an established industry leader, having access to high-quality advice can enhance any organisation’s chances of success.
In my travels around the world of recruitment I am seeing more businesses choosing to have an advisory board or appoint an external advisory board member to assist them.
So why do they do it? Most would say it’s because they can easily and quickly benefit from the knowledge, understanding and experience of others without the formality, fuss and expense of a Board of Directors. Also the introduction of new blood into the team can often add a new spark which can revitalise a team and the introduction of external objectivity helps to open the established mindset to new, different or alternative ideas that help develop a sustainable organisation.
An advisory board is often made up of your own executives or senior managers along with one or more external specialists. This group meet regularly to provide non-binding strategic advice to the management of the company. It’s important that an external board advisor should complement the existing board and I tend to see that the informal nature of the relationship offers greater flexibility in structure and management compared to the traditional role of the Board of Directors. The advisory board or board members should have no authority to vote on corporate matters and they may not bear fiduciary responsibilities, they are there to assist with strategic focus of the business and at times be prepared to challenge you to ensure you make better informed decisions.
It’s not uncommon for companies to have an advisory board before they have a Board of Directors. The development of an effective Board of Director requires a group of individuals with good chemistry along with the combination of appropriate skills to propel the business forward. In reality what I have found is that establishing an advisory board allows companies to assess the commitments and capabilities of individuals and observe the chemistry between them before appointing them to a board of directors, quite similar to the temp to perm scenario really, and we all know how well that works, right?