Role of the advisory boardThe role of the advisory board is to have experts to share their insights and to fill knowledge gaps among corporate leadership. Advisory board members are often selected for their particular areas of expertise. Unlike a board of directors, an advisory board does not serve a management function, nor do its members represent shareholders. They are there to provide advice and expert knowledge. Advisory board members typically receive lower compensation than their board of director counterparts. Advisory boards also often provide safe harbours for executives who may be able to test-drive options" before taking them to the board of directors, according to Ivey Business Journal. However, despite the formalization of advice, advisory boards tend to be less formal, and to go with the flow of executives' needs. A CEO, for example, may feel more comfortable expressing a tentative or partly formed view before an advisory group whose purpose is to provide advice and feedback.
Role of an advisory board chairmanAn advisory board chairman serves as the point of contact between the board of directors and the advisory committee. The advisory board chairman is responsible for running the board meeting as well as appointing subcommittees, if necessary. The major duties of an advisory chairman, according to the Houston Chronicle, include:
- Attending advisory board meetings
- Providing counsel
- Appointing subcommittees
- Monitoring discussions during the meetings
- Mitigating any conflicts that might occur during the meetings
Creating a stellar advisory boardAn advisory board ideally offers support beyond the expertise and knowledge board members and company executives can offer. Selecting an advisory board is quite similar to selecting a board of directors, but with a few variations. Best practices for creating a top-level advisory board include:
- Focus on the expertise the advisory board should have. What specific experience should advisers have in order for your organization to gain insight? Some advisory board members may have perspective on a particular topic. For example, a Science Advisory Board (SAB) might include advisers from scientific organizations, both private and public. The Environmental Protection Agency (EPA) has an SAB that was established in 1978 and that provides scientific advice to the EPA.
- Recruit brutally honest individuals. You need advisers who aren't afraid to cast doubt and to contradict leadership. Offering only the advice leadership might want to hear means potentially ignoring best practices and facts on the ground, which will only work against a company. Advisers are chosen for their expertise, and they need to feel comfortable offering that expertise.
- Keep the board size small. The more intimate your advisory board, the better you'll be able to leverage their expertise and skills they won't need to fight to be heard, and the board will have greater flexibility. A good rule of thumb: An advisory board should number about half the members of your corporate board.
Running an effective meetingRunning advisory board meetings takes many cues from best practices for the larger board of directors. The key to getting the most out of the leaders on the board is similar to that of any corporate meeting. Have a clear agenda. Make sure you're focused on what will be covered in the meeting as well as the pertinent information, such as location and time, length of meeting, and topics to be discussed. Preparation is everything. Be sure to send out the agenda to the advisers in advance (a week or even a month prior) to set expectations. Determine the meeting frequency. Advisers' time is precious, so make sure you maximize the time spent for advisory board meetings. The cadence of the meetings will be determined by your advisers' availability and how often you want their advice. Whether your advisory board meets once or twice a year, "it's important to keep advisers informed of your organization's activities between meetings," AllBusiness noted. Consider how technology can help. Is there a way to distribute your materials securely before the meeting? Will you be able to record the meeting, or hold the meeting virtually? Is there a way for you to digitally inform the advisory board of any updates? A board portal can offer ways to securely collaborate with your advisory board even if they are dispersed around the globe. Put advisory board charters in writing. While advisory boards are more informal than company boards of directors, they should still be governed by written agreements," the New York Times noted. It's imperative to meet with a lawyer before creating an advisory board in order to help draft charters, board responsibilities and logistics, and non-disclosure agreements, which all advisers must sign.
Sample Advisory Board Meeting Agenda
1. What follows is an example of an advisory board meeting agenda. While each advisory board will have its own needs, the following is a high-level example of how an advisory board meeting can be structured. Advisory Board Meeting Agenda: 1. Meeting Opening: Roll call of advisory board members present
- Confirmation of action list
- Review of meeting process
- Major strategy decisions list
- Topics to be discussed
- Advisory Board Chair report
- Current significant issues
- Matters for approval
- Update on previous minutes
- Update on action items
- Risk and compliance items
- Advisory Board vote (if applicable)
- Review of actions to be taken
- Meeting evaluation
- Next meeting scheduling
- Meeting close
- Advisory board is disengaged and rarely meets
- Meetings lack a call to action and a clear process
- Advisers don't offer any advice
- Lack of communication with advisory board
- Advisory board lacks focus
- Meet at the start of each year to review the advisory board's plan
- Create a monthly update report to inform your advisory board
- Ask for particular advice and feedback from your advisers
- Consider increasing compensation or bestowing some equity in the company
- Keep the meetings short and focused