"In today's business environment the rate at which business leaders learn is an emerging competence. Establishing an advisory board (learning forum) is a simple mechanism to access external wisdom, and focus learning specifically around the business and the needs of the owner"
Ben Kehoe, Director - Industry Consulting Group
What is an Advisory Board?
An advisory board is a select group of "independent" people who provide advice and support to the owners, shareholders and/or directors of a business. They provide non-binding strategic advice to organisations and hence are informal in nature. This gives great flexibility in how they are structured and managed.
How is it different to a formal board of directors?
Where formal boards have legally defined responsibilities, advisory boards are not regulated under the Corporations Act nor corporate governance codes. Advisory boards simply advise. They do not make decisions like a formal board.
What does it offer a business owner?
- A broader business perspective to help evaluate key business decisions or strategic choices
- Industry or technical expertise that is missing from the management team
- Key industry connections with suppliers, customers or other stakeholders
- A sounding board for business owners and leaders
- Draw on the skills and knowledge of others who have practical experience in growing a business
- Enhance the company's reputation and credibility in the marketplace
- Increase consumer and investor confidence
- Attract superior employees by demonstrating a commitment to company growth
- Create a potential source of members for the 'main' board as the company grows
- Test the quality of "outsider" contributions to the business (for family companies)
What is the focus of an advisory board?
Each company will need to determine the roles and responsibilities of its advisory board to best suit its particular circumstances and needs. Typical roles and responsibilities for advisory boards include:
Provide "wise counsel" on issues raised by the owners/directors or management
Provide the directors and management with insights and ideas which can only come with distance from the day-to-day operations
Encourage and support the exploration of new business ideas
Develop a deeper understanding of the business strengths, the market and industry trends
Act as a resource for executives
Encourage the development of a governance framework that enables continued growth, whilst not stifling the spirit or vision of the founders
Monitor business performance and challenge the directors and management to consider options for improving the business
Sourced from Australian Institute of Company Directors: "The benefits of an advisory board – mentoring for growth"