Thinking About an Advisory Board?
I recently had a conversation with one of our members about the role a “dedicated” advisory board can play in assisting an owner and/or CEO leading a private business. I used the word “dedicated” because this is different than what we offer at PEO where both owners and leaders participate in shared advisory boards. The offering and expectations are quite different. I thought I would share some of our thinking below and look to you to share some of your own insights and experiences.
Here’s an extract of our discussion:
What is the purpose and function of an Advisory Board?
- To challenge the owner with their goals and objectives related to their business(s).
- To ensure the owner is seeing things from various perspectives outside of their business as they consider their strategy and growth aspirations. Depending on the organization these could be macro local, national or global changes in the landscape, such as the digital transformation and its impact on a business in the future.
- To review the financial budgets, actuals, variances and management’s explanations/discussions. An advisory board’s responsibility includes challenging the CEO, management team and the owner on their financials and growth aspirations.
- To help with succession, compensation, management/leadership challenges, and to serve as an outside independent voice on various aspects of their business.
- To whom does the Advisory Board report – CEO, Chairman?
An Advisory Board is not the same as a Board of Directors. The members of an Advisory Board are selected to participate by the owner of the Company and therefore report directly to them.
It’s important to note that the owner understand that he/she doesn’t want a board that will agree with everything they propose and discuss. The members of the board are there to listen, challenge and share their experience and insights.