In this blog post, we explore some of the factors that promote the effectiveness of advisory boards. In a previous blog post, we considered the role that advisory roles may have in organisations and the value that they bring to senior management.
Advisory boards are impactful to the extent that they are effective. While some of the factors driving the effectiveness of advisory boards are the same as those driving the effectiveness of boards and sub-committees, there are specifications reflecting the very nature of advisory boards.
- A well-defined role, purpose and mandate
Advisory boards do not have a prescribed role and it is up to the company that sets them up to define their role, purpose and mandate. To enable an effective advisory board, companies should ask themselves why they are setting up an advisory board and clarify their expectations with regards to the output of the advisory board.
The role, purpose and mandate may be documented in a charter or terms of reference. As noted in our Part 1 blog post about Advisory Boards, advisory boards are most useful supporting entrepreneurs or advising senior management and the board of directors on specific or technical matters.
2. Clear responsibilities and accountability
As noted above, responsibilities should be clearly defined alongside the role, purpose and mandate of the advisory boards.
Advisory boards are accountable to senior management and the board of directors. Accountability should be clearly established so that contributions from the advisory board are valued and acted upon. Regular interactions between the advisory board, senior management and the main board are recommended. This can be done through attending the advisory board meetings or meeting with the advisory board chair.
3.Composition and chair reflective of purpose and responsibilities
Advisory boards may be composed of as few or as many individuals. This may be a larger number the bigger the size of the organisations and the higher the complexity. Ultimately, the number of advisory board members will reflect its purpose and mandate and expectations from senior management and the board of directors. Larger advisory boards will be more challenging to manage and costlier.
Advisory board members should bring value to the business and be selected given their expertise, industry knowledge, experience, skillset and network. They need to bring specific skills that are missing and are important to the success of the company.
It is recommended that the management team and/or functional experts that are employees of the company attend advisory board meetings. Non-executive directors may attend.
The chair may be appointed among the members of the advisory board. Large companies will most likely appoint an independent chair. For private business, the founder and CEO will most likely chair advisory board meetings.
The role of the advisory board chair is crucial as the chair will drive the contributions of the advisory board and ensure that its recommendations are acted upon through communication and interaction with the management team and the board of directors.
4. Professional management of meetings
A coordinator for advisory board meetings should be appointed to deal with administrative matters and liaise with the chair to agree the agenda, prepare the materials and write minutes. The company secretary may take this role but not necessary.
The coordinator or the chair may also liaise with senior management and the board of directors to report on the activities of the advisory boards so that contributions are heard, understood and potentially acted upon.
The frequency of meetings reflects the stage of growth at which the company is and the purpose and mandate of the advisory board. In addition to formal meetings, ad-hoc meetings may be required to discuss specific topics for which the expertise of the advisor board members is needed.
5.Recognition of advisory board members
Advisory board members should have their input and contributed recognised. This may take various forms, from a dedicated webpage on the company website to monetary compensation. Compensation is discussed in the Part 1 blog post about Advisory Boards.
If you have experience as an advisory board member and would like to share some of the advisory board best practices that you have experienced, please e-mail Elise Perraud at [email protected]. NEDonBoard is looking for experienced board advisors to participate in a roundtable meeting to discuss further the value and operation of advisory boards. We look forward to hearing back from you!
If you are considering setting up an advisory board for your organisation, please contact [email protected]. NEDonBoard is a membership organisation and has a pool of talented members looking to engage with organisations as advisory board members.
If you are considering becoming an advisory board member, join NEDonBoard as a member.
On behalf of NEDonBoard, Elise Perraud