As a company director there are several reasons why you may want to appoint an advisory board; many businesses do so to help them with strategic direction. If you run a business, and you have appointed a board, the next step is to ensure you manage it well.
In this blog we share some top tips on how to manage your advisory board.
An Advisory Board is a body, a group of individuals, that are selected to help provide advice and support to a business.
More informal and flexible than a statutory board, an Advisory Board can provide businesses with guidance and expertise to help them achieve their goals. In our blog ‘What is an advisory board?’, we cover some of the benefits of appointing one, and the differences between advisory and statutory boards, so if you haven’t appointed a board yet, you may find this helpful to read first.
The great thing about an advisory board is, provided you have made your selection carefully, you will have a group of invested and experienced individuals who will push your business forward. Each advisor will hold other members accountable for progressing their tasks and goals, including you as a director!
It is important to remember however that a member of an advisory board does not make the individual a director of the company, and neither is an advisory board a substitute for the board of directors. As a director it is important for you to manage the level of influence any advisor has over the company to ensure the danger of shadow directors is not present.
If you don’t lay out clearly how your advisory board will operate your members could be at risk of acting as shadow director. Ultimately as a director of a business you are accountable for managing and operating your advisory board in the company’s best interests.
When managing an advisory board you have more flexibility than with statutory boards, we have mentioned that advisory boards are more informal than a board of directors, and therefore you can to a certain extent choose what works for you.
There are no set rules for how you operate your advisory board in terms of how often you meet, or what your objectives are. Your advisory board could meet regularly or infrequently depending on how you have set it up, and don’t even need to meet all at once if that doesn’t suit, it depends on what you hope to achieve.
Setting a terms of service agreement is an important part of laying the foundation for your advisory board – this will cover all the details of exactly how the company and board will work together.
When creating this you might want to ask the following questions:
What you as a director must do when managing your board is be clear from the outset about what is expected from board members and what their purpose is.
Remember the difference between advisors and mentors; mentors act in an informal capacity and are not paid whereas advisors sign formal agreements and are compensated for their time and contributions, usually with equity.
You will have recruited your members with your business’s needs in mind so communicating regularly and clearly with them will help to keep everything on track. Depending on who is taking on the role of managing the admin for your advisory board, you will still need to prepare meeting correspondence and papers and make sure they are distributed efficiently, securely and on time. Using a tool like the BoardSecure Portal is one way you can do this painlessly.
It is advisable, particularly for young companies, to review both your objectives for the advisory board and its members regularly. The needs of your business may change quickly, and it is important that you are able to change both memberships and terms of reference with it!
With regular changes tracking your progress can get complicated, so using a tool like the Governance 360 ActionPlan can be invaluable at this point, as it can track all our actions, outputs and next steps in one place.
The most important thing to remember as a director who has appointed an advisory board is that by managing it well you will a) achieve better outcomes for your company and b)ensure you are fulfilling your director responsibilities by acting in the best interest of the company; its worth a little time and thought.
Read our ‘What is an Advisory Board?’ blog here.
Find out how Governance360 can help you understand the different types of directors and board roles in our director training course here.