How to build an advisory board that can help your business make informed decisions
Geri Stengel didn’t waste any time getting to the point with the advisory board she put together at Fiscal Management Associates. The firm, with offices in New York and Chicago, needed guidance in developing financial best practices for the organizations it represents in the nonprofit sector.
“We used the advisory board to develop a quantitative research survey and to interpret the results of the survey,” says Stengel, president of New York-based Stengel Solutions. “We had one in-person meeting and the rest was done by email and telephone. It was a very specific purpose.”
Stengel has served on advisory boards for Ground Floor Ventures, a women’s technology company incubator, and American Express. She is presently on the board of the National Association of Women Business Owners-NYC.
She says that clarity of purpose must be a priority in any advisory board you are looking to assemble. The people you are asking to give of their time and talents need to have a compelling reason to do so.
“We did not go beyond the initial specifications, so we were very focused in what we asked them to do,” Stengel says. “We didn’t ask them to do anything else. When we said a meeting was going to be 90 minutes, the meeting was 90 minutes. When we said we would not go over a handful of additional email and telephone follow-ups, we really kept to what we said. We defined a scope of responsibility for the advisory board and we kept to those guidelines.”
Whether you are using an advisory board to develop best practices, launch a new product or enter a new market, you need to approach each step of the process with a clear sense of purpose.
Look for commitment
One of the most common mistakes a company can make when looking to form an advisory board is rushing the process. There is a difference between being purposeful and trying to rush to a conclusion.
Stengel’s advisory board for FMA only met in person once, but it continued its work for nearly a year before wrapping up and offering its recommendations.
“It’s a committee, and committees take time,” says Chuck Rauenhorst, president of Rauenhorst Recruiting Co. “They are not a quick fix. Typically when you want an advisory board, you’re looking for more than one way to get something done and you want to hear other people’s experiences.”
Approach the process with an idea of how long the board will need to function and share that with people as you seek to populate your board so they are able to make an informed decision about whether they want to participate. Also think about the kind of people you want and the type of expertise you are looking to tap into.
“Be honest with yourself regarding your knowledge and experience limitations and find trusted friends and advisors with those skill sets,” says Wayne R. Pinnell, managing partner with Haskell & White LLP. “Use that network to find other skills that you cannot find on the first pass.”
Find people who are genuinely excited about the opportunity to be on your board and steer away from those who seem willing to participate but not particularly excited by the opportunity.
“When interviewing and selecting members for the advisory board, select those who are motivated by the vision and growth goals for your organization,” Pinnell says. “You want folks who have a passion for what you are doing and not necessarily those who just do it because you asked them to. Oftentimes, ‘compensation’ comes in the form of making a difference.”
Diversity of race, gender and experience is also important to ensure that you have an advisory board that considers different perspectives. But don’t include people just to fill a quota.
“In most circumstances, you absolutely want to have young people,” Stengel says. “And you want to have a range of age, ethnicity and gender. But it’s also critical that you don’t just have one person representing a group, whether it’s gender or ethnicity. If ethnicity is really important, make sure you have three people of color represented. If gender is important, you want at least three women.”
Otherwise, you appear to be assuming that one member of a particular group will have the same opinion on a subject as the rest of that group.
Focus on the problem
Once you have put your advisory board together, make sure everyone is clear about the goals of the board and what will happen with the recommendations it makes or the actions it takes.
“If trouble arises after the first or second meeting, it is usually discovered that no one knew what the board’s duties were or precisely what to do when the committee faltered,” Rauenhorst says. “There are three types of meetings: problem finding, problem solving and informational. Concentrate on the first two.”
If you are considering launching a new product, have the board look at what hurdles you need overcome to make the product a success. If you want to enter a new market, ask the board to study the pros and cons of doing so using their experience as guidance.
Stengel says you don’t need to have a fully developed plan in place before an advisory board begins meeting because it is the board’s job to help you develop that plan. But you do need a specific agenda.
“Your advisory board is there to help you flesh out whether a plan is even appropriate,” Stengel says. “You might have stalled growth. You might see a big opportunity. You may be faced with an unusual challenge and feel you don’t have the resources in your existing network to solve it or take advantage of it. Be very specific in your agenda.”
If you can afford to do so, hire a facilitator to lead your advisory board and keep the members on point. But even with a facilitator, someone from your company needs to be interpreting what the board is doing.
“Even with the facilitator taking notes, that person isn’t really interpreting it,” Stengel says. “They may be gathering the information and analyzing it, but it’s the entrepreneur who has to interpret the market intelligence and decide how to use it.”
The owner or CEO of the company should not be the leader of the advisory board. But you do need someone to be in touch with the board and keep you apprised of its findings.
And if a specific department is being discussed, you may need to bring in a person from that department to help the advisory board sort through the matter.
“An HR issue will certainly affect operations and finance,” Pinnell says. “A marketing issue should intertwine with operations, manufacturing and product development, for example. Use the group to leverage the individual skill sets for the benefit of the whole.”
Whether you adopt everything that the board recommends, or choose not to go forward with anything it came up with, make sure you show respect and appreciation for what the members have done for your company.
“Demonstrate that you understand the value of what they are giving you,” Stengel says.