An advisory board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the board of directors. Unlike the board of directors, the advisory board does not have authority to vote on corporate matters or bear legal fiduciary responsibilities.
Many new or small businesses choose to have advisory boards in order to benefit from the knowledge of others, without the expense or formality of the board of directors.
The function of an advisory board is to offer assistance to enterprises with anything from marketing to managing human resources to influencing the direction of regulators. Advisory boards are composed of accomplished experts offering innovative advice and dynamic perspectives. Meeting quarterly or biannually, boards can provide strategic direction, guide quality improvement, and assess program effectiveness.
Entrepreneurs, especially from startup companies or small business may not want to dilute their control of their business by establishing a board of directors with formal responsibilities and authorities. Thus, an advisory board may be a more suitable solution to entrepreneurs who want access to high-quality advice and network in the industry. Advisory board, as an external group, could also provide non-biased information and advice to entrepreneurs.
The benefits of having an advisory board over board of directors may include the following:
- Preparation for board of directors
- Higher efficiency
- Distance control
- Formal advice
- Less pressure on executives
- Directoral Input
- Focused input
Roles and responsibilities of advisory board members
- developing an understanding of the business, market and industry trends
- provide wise counsel on issues raised by owners/directors or management
- provide unbiased insights and ideas from a third point-of-view (not involved in the operation of the business)
- encourage and support the exploration of new business ideas
- act as a resource for executives
- provide social networking platform for directors and the company
- encourage the development of a governance framework that enable sustainable growth of the company
- monitor business performance
- impose challenges to directors and management that could improve the business
There are two key questions to be asked when creating and operating an advisory board. The first question is who is trying to achieve what from an advisory board. The second question is how the business of the board should be conducted. The following issues need to be addressed.
- Mandate
- Focus
- Size
- Meeting organization and frequency
- Term of membership
- Compensation
Our experienced team cover all circumstances and across a wide range of sectors. Our approach is to start with a clear understanding of the situation and design a bespoke model using proven methodologies and techniques. The advantages of our models include creating outputs and usability that are designed specifically for the user, as well as providing the flexibility of assumptions to perform sensitivity analysis.
Our experts partner with clients, providing perspective not only on immediate value and impact, but on long-term implications. We work closely with management and other advisers to leverage and complement their knowledge and ensure maximum impact, and actively support implementation and skill building.
