A friend of mine was descending the long path from the Acropolis back to the centre of Athens. It was a hot day, and the path was dusty. A rather large gentleman with a heavy camera around his neck was struggling up the hill towards Tony. His sweaty t-shirt said it all.
Pointing up the hill towards the extraordinary historical Greek monument, the gentleman panted, “is it worth it”?
Quick as a flash, Tony said “wouldn’t bother”.
And with that, the guy turned around and headed downhill. He would never know what he missed.
Are Advisory Boards like that? Worth the effort? Is ignorance bliss?
What do these boards do?
An Advisory Board is there to help directors and managers in their responsibilities to run the business. They give advice, provide expertise, act as a sounding board, assist with strategy, interpret information, provide critical analysis and act as a devil’s advocate.
What don’t these boards do?
They don’t make decisions. They do not have responsibility for the business. That role lies with the directors alone.
How do they work?
Typically, an Advisory Board will meet quarterly. The Advisory Board will comprise an external chairperson, one or two external specialists, plus the CEO and a couple of (C-suite) people from within the business. The external chair and advisors will bring business and industry expertise, or specialisations such as marketing, people management, finance, M&A, or operations.
Members of the Advisory Board are often called upon between meetings to provide further assistance and advise on specialist matters in which they have high levels of skills and experience. Some Advisory Boards also participate in Strategic Planning.
As they are not statutory directors, and they should not act as quasi directors and, as they should have an engagement arrangement confirming their role, the position of the Advisory Board member should not bring the same level of legal responsibility as that of the director. That reduces the personal liability that comes with being a statutory director. As such, it is easier to attract good people for the task.
Typically, this role will attract a fixed annual fee that is dependent on the level of commitment for meetings, preparation, pre-reading and other between-meeting involvement and expectations. All governed by the engagement arrangements.
We have a growing number of our business owner clients using an Advisory Board.
One client cited the charismatic 1980’s politician, Don Chipp, in his famous saying, that my Advisory Board is there to “keep the bastards honest”. He probably includes himself in that group! Perhaps an extreme view, but that client values the input of the Advisory Board in helping him keep the strategy, conduct and performance of the business on track.
Is it worth it?
Tony called to the gentleman and told he was only joking. Somewhat bemused, he turned back around and headed on up the hill. Maybe he found a memory that he will always cherish?
Even I made the effort to visit the Acropolis.
Chris Alp
