We all need advice from time to time especially owner managers who have invested entire careers in a business without the opportunity to work in other industries or companies. Any HR person knows that the more diverse the experience the better the leader but that’s a luxury that time and focus just does not permit for owner managers. Sure an owner grows with the business and becomes a deep expert on the product or service that they provide but there comes a time when more than that is needed.
In startup mode a business follows its vision but as it grows additional expertise in areas that the owner is not so strong will be required. These are met by either adding staff to payroll or external advisers rented by the hour. The question then is can you completely trust this advice? Are staff members more likely to tell you what you want to hear and do external advisers have a conflict of interest?
This dilemma coupled with the desire to share experiences with objective contemporaries in similar phases with their own businesses causes many owner managers to seek out peers or groups of them that cater to the needs of leaders. There are many that cater to varying types and sizes of business e.g. The Young Presidents Association, TEC Group, and The Alternative Board are just a few examples. They provide real time case studies in groups of similar sized businesses from different industries and often one on one mentoring by the hosting coach. These are powerful experiences and provide exposure to different philosophies and insight into different ways of addressing challenges.
These groups however, have their limitations, time being the biggest. Most peer groups meet once a month for a day or less with a couple of hours personal mentoring in between. Let’s assume that groups are limited to twelve which means that once a year your company will be on the agenda. If 2 member profiles are examined each month, that means twice a year but for less time. While you have access to an excellent group of individuals many of whom will be happy for you to reach out between meetings, none of them will be experts in your industry or in your company. All of them will be giving you their best opinion within the time constraints and stresses of running their own enterprise.
At some point a business needs more than this. When an owner wants to take their business to the next level but feels that they don’t have the expertise or that they require a second opinion, the focus of external industry or specialist experts will be required. A dedicated advisory group whose members think about and address only the issues related to that one business.
Advisory Boards are established for numerous reasons but their purpose needs to be well defined and clear to enable the appointment of the appropriate expertise and its direction. The primary purpose will not be the work of a public company board e.g. audits, succession planning, and stock exchange reporting. An Advisory Board must have a specific mandate so that its members can focus their attention. They should be compensated ideally in part, with real or phantom equity to align their interests with the shareholders of the company.
Members’ time is precious and so plan to make maximum use of it. Ensure management is committed to support the board by attending meetings and providing it with full information. Appoint a Chair to manage meetings, content, and the agenda and provide meaningful on-boarding and a written mandate confirming their responsibilities.