The recent growth in the role of advisory board reflects the rapid change the business sector, the need for boards to focus on governance matters and the recognition that even great founders and CEOs are busy people and cannot be experts in everything. 

The appointment of an advisory board with an appropriate mandate allows somebody with C-suite experience to project manage and deliver an outcome. This is more than a consultancy as a cause for budget and project management skills as well as relevant expertise. An advisory board is a focused time sensitive way to answer a specific problem with an agreed budget.

The effective use of advisory boards allows CEOs and boards to remain focused on key corporate objectives and their increasing governance roles whilst moving forward with initiatives to add shareholder value. Today we must all focus on delivery of business performance.

10 Reasons why Businesses Appoint Advisory Boards

  1. They bring expertise and can focus on the question asked of them.
  2. CEOs and boards don’t have all the skills.
  3. CEOs and boards need to focus on compliance and delivery of announcements.
  4. Consultants and advisers need to be kept focused on the question asked.
  5. Advisory board members have different networks and lived experience.
  1. Advisory board members can be extremely specialised in their recent experience such as working in a foreign country.
  2. Appointments cease at the edge agreed time or upon delivery.
  3. Advisory board members are neither part of the company for wanting re-election
  4. Who you appoint is who you get to do the job
  5. CEOs and can use advisory boards to provide confidential responses.

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What is Advisory Board Service?

At Projects RH we have a wide group of strategic partners and friends who can assist companies in specialized areas over the mid-time by becoming an advisory board member. It is a service for when you need it; whether is a specialized project, assistance with a project or just a punctual call.

An advisory board member does not have the same responsibilities as a board member, and therefor can focus only on the tasks assigned to the advisory board or member.

Many companies need help as they transition to the next scale of operation. You pay for what you use and when the project ends, so does the service.

Who needs an Advisory Board?

Increasingly, companies of all sizes are seeking to appoint advisory boards because of the growing statutory responsibility put on boards; they have to focus on this rather than growing the company.

Specialist firms such as architects and engineering advisers, may be very good at what they do, but they not necessarily have the skills, or training to look at mergers, adquisitions or diverstments.

Equally, a board may not have all the skills that it needs, so it will appoint its own specialists to vet projects or work with them.

We generally see advisory boards for small to middle companies who are seeking access, over a longer period, to expertise, to help them grow. This expertise includes finance, business planning, legal and technical services.

What are the Benefits of Hiring Us?

At Projects RH we can find you the right person. Generally, people seeking an advisory board are looking for a mix of skills to undertake a project or transition of the business.

We have the teams and/or the expertise to know where to find it. Members of our team are available also to assist and coordinate the outcome of the work of the advisory board, ensuring that you end up with substantive recommendations and the way to carry these out.

Should you have any concerns we are always available at the end of the phone.

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Why have a Board?

In any business, large or small, the owner/CEO can lose sight of the big picture. They may become obsessed with one way of doing things, in spite of repeated evidence that it is not working. They can be too internally focused and miss important opportunities. Even the best of CEO’s can miss their own shortcomings.

When Roman generals rode into towns to be welcomed by the cheering crowds, having just been liberated from the grip of their local thug-king, there was a slave placed in the general’s chariot whose job was to whisper into his ear “Remember – you are not a god”.

 

Who is whispering in your ear?

The board is there to cover the CEO’s back- to ensure that he/she does not miss something and to offer objective feedback on how they are doing their job. These are just some of the roles of a formal board:

  • Ensuring enduring value to the shareholders
  • Strategy formulation and policy making
  • Monitoring performance against shareholder expectations and strategic plan
  • Recruiting and overseeing the CEO
  • Guide and motivate CEO/management
  • Ensure the organisation meets shareholder expectations of compliance

In a formal board, this is the arrangement:

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The function of a formal board can represented in the following way:

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All successful medium and large businesses operate with a board that includes non-executive directors, who are uninvolved with the day-to-day operations managed by the CEO and his/her executive team. The non-executives bring outside experience and perspective to the executives and hold them to account, ensure good governance and that the interests of all stakeholders are protected. They also ensure the executives do what is agreed by the board, and monitor performance.

Smaller business, but with turnover greater than $1m, will often have Advisory Boards. The members of these boards are not directors in the company, as for larger businesses, but provide advice and accountability. The primary difference to formal boards is that these advisors can not enforce actions in the way that a board of directors is legally obliged to do – as non-executive directors in a legally constructed board can be held financially accountable for the failures of the executives if they have not fulfilled their fiduciary duties. As a result of this responsibility, formal boards have the authority to sack the CEO for non-performance!

The Advisory Board is a great arrangement for owners of smaller businesses as they do not want to dilute their control. Also, to attract directors who will be prepared to take on the legally required responsibilities in a formal board is a much higher cost than bringing in advisors without the legal burdens of a director. A business at this level may have 3-4 external advisors on their Advisory Board.

The Advisory Board has weaker accountability than a formal board as the ultimate decision on whether to proceed with a particular course of action recommended by the board is that of the executives (owners). However, if the owner keeps ignoring the board, and performance deteriorates, the advisors won’t hang around for long. Even though they have no legal liability, the advisors would not want to be associated with such a business as it will damage their reputation. (On the other hand the owner who ignores their advisory board, and is continually proved right should sack their advisors!)

Working towards an Advice and Accountability Board

Before this stage of their development, businesses have poor reporting systems and do not regularly review performance against a plan. Empower Business Solutions can prepare businesses for this stage by:

  • Helping to develop performance measurement systems
  • Reviewing the effectiveness of their current strategies
  • Providing an insight on how they compare with similar sized businesses
  • Giving objective advice on the issues that affect their business
  • Creating the necessary business discipline
  • Providing a regular dose of motivation and a reality check with a kick up the butt if appropriate to keep them going and on track

This enables the owner to grow their business, achieve their business goals, create a Saleable Asset and have a business that runs without them.

To find out more about how to take your business to the level where you are ready for an Advisory Board request a Complimentary Business Evaluation and find out how to:

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