Building a strong and healthy organization with a strong and thoughtful structure alone can be very difficult. Regardless of the type or size of the company, having a quality board of directors can help you increase your productivity and success in the marketplace. If organizations have reliable sources where they can advise and ask for advice it will only positively affect the company, which is why advisory boards have been gaining so much popularity lately. In this article, we will highlight the main advisory board guidelines, their roles, responsibilities, and goals.
What is an advisory board? General Characteristics
An advisory board is an elaborate structure for a company to communicate with outside experts and consultants. In addition, they may also include business representatives and an independent chairman. They take a rather passive and supervisory role in the council; from the outside, they observe what is happening to give constructive advice to the owners of the company later.
This type of board is especially important for large organizations, as well as nonprofit companies, governments, and others. The issues in which the board will advise the company is determined in advance of the first meeting.
In general terms, an advisory board consists of an independent chairman, two external experts, and two internal business representatives.
What are the responsibilities of an advisory board
From the name, it is clear that the main purpose and responsibility of an advisory board is to provide the company with valuable advice, but what kind of advice will be provided depends only on the agreement of the companies. The most common issues include the following:
- Business development and expansion
- Supporting a key transition within the organization
- Solving various business issues
- Consulting on crisis management
- Strategic and technical advice
The professionals who make up the advisory board are selected purely by the company’s management and not by its stakeholders, as they have more experience and expertise in a particular industry sector of the company.
When would an advisory board be an advantage?
Organizations can need help with almost any issue, but you should think about and form specific goals for what your advisory board will serve. This advice can benefit in cases such as:
- Private companies
For many executives, the decision to outsource their business structure can be difficult, so forming an advisory board can give them a chance to gradually get used to working with an outside group of people and taking their advice. Also, advisory boards can be a meaningful help to the regular board of directors, for whom having members with diverse backgrounds in different areas are important.
- Safe Harbors
A leader can voice their suggestions for an advisory board before moving on to an announcement in front of the CEO and a group of colleagues. This will help them test all the options and provide a wiser solution, which is especially important if the CEO is setting the rewards for the idea adopted. The advisory board itself can initiate change.
- Targeted input
When a company is struggling or uncertain about a particular aspect of its business, it can hire an advisory board that will specialize specifically on that issue without taking the time to analyze and discuss other aspects of the business. That’s what makes it much different than a regular board of directors.