Part 5: The Charter Document of any good Advisory Board
We have highlighted several times in this series that the most effective Advisory Boards have Clarity of Scope and are structured to be Fit for Purpose. But without a solid Charter Document, there is no accountability on what the AB should achieve; how it will be measured; what the roles and responsibilities are, and more. This Charter article further develops the ideas behind the exploration of Advisory Boards, including Part 1 (what an AB is); Part 2 (Advisory Board versus Board of Directors); Part 3 (what an ideal AB looks like), and Part 4 (comparing advisors to consultants).
Without any structure, an Advisory Board meeting might just be a casual business chat, without direction or goals, and thus add little value. It would certainly feel more like a one-off chat than a well-designed ongoing process with short-term and long-term value in mind.
And so, when an Advisory Board is being set up, creating a Charter should be an early essential step.
Components of an Advisory Board Charter
The following items are common, but not a prescription:
• Objectives of the AB,
• Measuring the achievement of these objectives,
• The structure of the AB, make and eliminating appointments, advisor remuneration,
• Frequency, duration and location of meetings (including remote, if acceptable),
• Roles & responsibilities of the various AB members (including the person in the company who is sponsoring the AB),
• The authority – if any – that the AB has,
• Confidentiality and conflicts of interest,
• Expectations in terms of participation, pre-reading & preparation, follow-up,
• Evaluating AB members (when & how).
Advisory Boards can add substantial value to companies, which is why their use is growing in popularity (and appointments continue to be renewed). However, just because an Advisory Board does not have the same fiduciary responsibility to the company, and appointments and authorities are less formal, doesn’t mean they should be treated as casual coffee meetings to “bounce a few ideas around” (of course, coffee is always welcome at Advisory Board meetings!).
The above Charter ensures that the AB has Clarity of Scope, the members are Fit for Purpose, and the impact of the AB is measured and proven to be (or not to be) value-add for the company. Ultimately, this ensures the long-term stability and success of the Advisory Board, and thus the company itself.
Establishing Your Advisory Board
If you’ve followed this series until now, it is clear that you have an interest in Advisory Boards, and are already foreseeing the additional value they may create for you.
It’s therefore worth considering now, what key points you might include in your AB Charter.
• What would be the key issues you’d like the AB to start considering?
• What metrics could you use to measure the genuine value added by the AB?
• How often would you want your AB to meet?
We’d be happy to discuss this further with you and bounce a few ideas regarding your needs and aspirations. Feel free to reach out now.
Written by Jonathan Watkin & Greg Solomon