My last two blogs considered whether an advisory board is right for your company, as well as addressing some of the issues to consider once it has been decided to establish a board. Choosing to develop a board and then searching for the right candidates and getting them on board are key steps. Once those are in place, your board is now up and running – congratulations! The next key question is how to ensure that the company and your advisors find the board to be productive and valuable. This blog addresses key points to enhance your board’s success.
First, the company should establish the frequency of board meetings, and the mix of in-person versus telephone or Zoom meetings. A wide range of meeting frequency can work depending on how much time the company and advisors want to devote to it. However, having two in-person meetings and two phone/Zoom meetings a year is often a good balance.
A key element of a successful board is communication — how often the company keeps the board up to date on significant developments. Sending regular financial statements to the advisors, typically quarterly, is important. In addition, informing the board of any significant developments is vital, whether that is done by email, a quick conference call, or otherwise. This helps members of advisory boards have a good sense of what is going on with the company. Lack of communication makes it difficult for them to provide quality input and advice.
Perhaps most important is that the company must be willing to listen and seriously consider the advice provided by board members. The single most frequent cause of dissatisfaction reported by advisory board members is the feeling that their advice isn’t being taken seriously and that the advisor is wasting his or her time. This ties back to what I earlier mentioned regarding whether the company should choose to have an advisory board – are the founders willing to take the time to work with a board and to seriously consider the input of the board?
As mentioned in a previous blog, a written agreement with each advisor is important. Part of the early recruiting process is for the company to state that the role is considered a one-year commitment, which the parties will mutually re-evaluate at the end of a year whether to continue the participation of the advisor. Even with the best of intentions from both sides, not every advisor relationship works out, for a variety of reasons. Having an easy “out” for both the company and advisor helps ensure that there is a clear path to an exit and a smooth ending process in order to avoid hard feelings; the last thing the company needs is for its former advisors to walk away dissatisfied or angry.
In summary, the process of establishing and maintaining an advisory board is time-consuming, and not necessarily right for every company. However, when properly executed, an advisory board should be an excellent source of input, contacts, and strategic advice, and well worth the effort.