Part 6: Advisory Boards support the Board of Directors (and everyone else)
There seems to be a misunderstanding among larger companies, certainly in financial services, that if you have a big management team and a strong board of directors (BoD), then you don’t need an Advisory Board (AB). But for those larger companies that do use Advisory Boards, a number of key benefits emerge. This article builds on the previous articles: Part 1 (What is an AB?), Part 2 (AB versus Board of Directors), Part 3 (What an ideal AB looks like), Part 4 (Advisors vs consultants), and Part 5 (The AB Charter).
Using the well-known Features-Advantages-Benefits perspective, we note the following:
The features of an Advisory Board include … (all the things we’ve discussed before)
The advantages would include access to experienced professionals, subject matter experts, and independent perspectives
But the benefits are all about what the above means for the company.
An AB ensures a more resilience company, resulting from the independent oversight, whether for the strategy, the processes, or the innovations;
ABs help boost growth and profitability, by helping avoid “groupthink” when a large corporate culture with many long-standing executives stand the risk of not appreciating how things happen outside the company, and indeed outside the industry;
ABs support better decision making, by taking pressure off the board of directors: dealing with technical matters, specialist topics, or new areas – to the point that these areas are already debated and stress-tested before presenting anything to the BoD;
Members of the AB can strengthen the executive team, through mentoring and talent development;
Improving stability and dependability, whether as pre-emptory risk management or responding to stresses or even a crisis. An AB is well-positioned to be part of the considered response, and can “hit the ground running”;
And, of course, companies with an Advisory Board have more options when they can demonstrate to third parties (investors, clients, business partners) that they have excellent governance, and benefit from independent and diverse input and guidance.
Although there are many parties that benefit when a company implements an Advisory Board (some internal, some external), the benefits to the Board of Directors should not be underestimated. ABs can help work through material to reduce what a BoD has to process, and can challenge the financials and ask early questions before the Board sees it. It can also take on some of the load of debating rather than deciding, which leaves the BoD more time to address the areas for which they are best suited, and where their contribution is most valuable.
From your perspective, consider which two or three of the above benefits of an Advisory Board would be most valuable to your company. Then let’s talk about how we can help you put this in place.
Written by Jonathan Watkin & Greg Solomon