Corporate boards have a heavy responsibility. That’s a very good reason to seek out people who have various types of expertise, so board directors can rely on them as various needs arise. There are a few reasons that boards may decide they can use the assistance of an advisory board.
Sometimes, boards have a unique problem that’s difficult to solve and that requires the help of experts. Boards may decide to form a temporary advisory board to deal with one extremely challenging problem and disband the group after they resolve the issue. Another reason that boards opt to form an advisory board is that they appreciate having a team of experts available that they can tap for their expertise on various issues as needed. Most advisory board members consider it an honor to be asked to sit on an advisory board, and it adds to an impressive resume. Still another reason for forming an advisory board is that experts tend to have a large network. Forming strong relationships with other people who form strong relationships helps boards stay engaged with their community and with other stakeholders. Regardless of the reason for forming an advisory board, corporate boards should know what they hope to gain from having an advisory board and be clear on the advisory board’s purpose.
Advisory boards get to be somewhat flexible in their roles because they don’t have any fiscal oversight. They’re not responsible for decision-making or the health or well-being of the corporation. The advisory board is on the corporate board’s side and wants them to succeed.
Creating an Advisory Board
Corporate boards may develop a mission for their advisory board. If so, the mission should reflect the reason for forming the advisory board. The composition of the advisory board depends on the purpose of the board. Advisory boards are usually comprised of some combination of managers, marketing experts, lawyers, accountants, IT experts or experts with industry knowledge.
The corporate board’s bylaws should outline the goals and expectations for the advisory board, and also the structure, terms of service, and limits and extent of the advisory board’s authority.
Running an Advisory Board
With regard to running advisory board meetings, flexibility again rules the day. Some advisory boards meet at regular intervals and others don’t meet at all. Board meetings may be formal or informal. The frequency of advisory board meetings depends on the size and needs of the corporation.
What is important is that the corporate board empowers the advisory board to develop a clear scope of their work. Advisory board members will be more invested in their work when they work together on their own work plan based on information the corporate board provides to them. In some capacities, advisory boards act much like corporate boards. They often establish measurable objectives and make reports and recommendations to the corporate board.
Managing an Advisory Board Agenda?
Advisory boards that have meetings will need to have some form of structure. At a minimum, they’ll need a board chair or facilitator to help keep order. Since advisory boards don’t have any formal rules, they may decide to rotate members in the board chair position.
Corporate boards should inform their advisory boards whether the board will supply them with a board meeting agenda or whether they can devise their own.
Even if the full board sets an agenda for an advisory board, the advisory board may have some amazing ideas on changing the agenda so that it serves the corporate board better. This is the time to engage the corporate board in conversation to make sure that both parties are clear on the advisory board’s expectations. Some corporate boards find a happy medium by letting their advisory board set their own agenda and having the corporate board modify and approve it before the advisory board meets.
Advisory board agendas pretty closely mirror corporate board agendas, except they’re usually not as extensive. Advisory boards almost never have subcommittees.
Advisory Board Agenda Sample
If you think about how boards create their agendas, usually they pose an agenda item as a question to be answered. The same is true for advisory boards. It’s best to plan the main agenda around a problem or discussion, with the goal of helping the corporate board with their work.
For example, let’s say the corporate board wants to form a response plan in the unfortunate situation of a data breach.
Form the issue into a question that leads to a goal.
“How will the corporation respond to the media, authorities, shareholders, employees, customers and other stakeholders in the event that the company discovers a data breach?”
The advisory board’s meeting would mostly consist of coming up with a strategy on a comprehensive corporate response.
A sample meeting agenda for an advisory board would be along the following lines:
- Roll Call
- Statement of purpose
- Discussion of the problem
- Outline the history of the problem
- Discuss how it’s affecting the company
- Gather relevant materials
- Make recommendations and proposals, and review next steps
- How and when to communicate the results to the board
At the next meeting, allow time early in the agenda to review the happenings of the last meeting.
How Board Management Software Helps Advisory Boards
Board management software systems have transformed the way boards do business because they streamline many of the governance practices. Advisory boards can also utilize board portals to conduct their board work. In fact, board portals provide a way for advisory boards to meet and share materials remotely, which is a great convenience for advisory boards.
Diligent Boards provides a highly secure platform where advisory boards can keep their agendas, records and collaborations private and secure. Board administrators have the capability to change user permissions within the settings so that advisory board members can only access the parts of the portal they need to conduct their meetings. Diligent Boards is efficient and cost-effective. Diligent Messenger lets advisory board members communicate wherever they are using whichever electronic device they have handy.
An advisory board can be a huge asset to a corporate board. However, corporate boards should be careful not to “set it and forget it.” Corporate board directors need to keep in communications with the advisory board to ensure they’re serving their purpose. Building trust and deepening relationships are a bit more challenging when board members on both ends don’t communicate often. As with any other relationship, advisory boards need occasional attention. When advisory boards have a solid purpose and fulfill it dutifully, having an advisory board can be a mutually beneficial arrangement.