Advisory Groups – safe harbours
Advisory groups are a great addition to small and medium enterprises adding capability to the company in areas such as leadership and management, team development, sales and marketing, HRM, internal processes and operations.
An effective advisory group assists and increases management capability especially where specific skill sets may not be available.
In today’s competitive business environment, organisations frequently seek outside expertise to help the company grow and prosper.
An Advisory Group is a team of people selected by the owners of the business ( or a Board if the business is large enough) to guide, counsel and advise a company’s CEO and Management on any number of issues in a flexible open and consultative manner. Advisors from different disciplines complement the strengths and expertise of the company’s management. Typically they may include a business coach, the company accountant, or a specialist in any other discipline as required. Advisory groups can be standing (ongoing) or ad hoc (one time) in nature.
Businesses of all sizes can benefit from having their own team of external advisors. Companies considering setting up an advisory group must answer a key question: “Why we are establishing an advisory group and what do we want out of it?” The company may be seeking assistance for anything from marketing to managing human resources to influencing the direction of regulators.
Thinking carefully about an advisory board’s purpose will ensure that it will be structured to maximize its contribution to an organisation’s success.
The advisory group members will have a range of skill sets that will add to and therefore assist the company. An advisory group is particularly useful in start-up and small companies, providing fresh ideas and unique perspectives.
Support and guidance from your advisory group may give you a greater chance to accelerate growth, improve financial performance, manage risk and enhance operational performance.
It can be a tremendous complement to the effectiveness of the Management and (if they have one) the board of directors as it works to carry out a specific, complex, major role (e.g., financial analysis)
Start-up companies will often seek advice from management practitioners in regard to various considerations such as finance or funding and or business planning.
Small and medium businesses often seek to engage specialists to assist with areas of their business where they may not have the specific experience and or knowledge
Specific needs could include; a review of strategic direction, funding needs, HRM issues, financial considerations, risk management, sales and marketing , internal processes and or operational improvements. Essentially, anything at all. SME in particular benefit where the advisory group is used as a business development tool and an adjunct to strategic planning.
An advisory group should consist of the owner and people with skills and or experience who can add value to the business. They must be absolutely committed to the process and fully engaged. Group members must have the background experience and skill sets to add value through their capabilities matching the company needs
Members must be totally cognisant with the company values, mission and vision and business plan. Members must be ethical, open and honest and must be up to date with industry trends, current news and regulatory issues.
Typically an Advisory Group is chaired by an independent .The members must have respect for and have the respect of the Management. You may want successful entrepreneurs from other industries who understand the basics of business and will view your operation with a fresh eye.
Having an Advisory Group does require a commitment in time and energy. Advisory Meetings are often set monthly or quarterly for the purposes of monitoring performance against predetermined strategic goals. Money
The whole point of having an advisory group is to improve the company performance by tapping in to the skills of the members. Both Management and the wider group need to buy in to the process and commit the energy to make it happen.
An Advisory Board has no legal authority. As a member, you don’t vote and you have no authority to make any final business decisions. You are there simply to give advice and input to the owners and to act as a sounding board. Furthermore, the owner has full authority to either take that advice—or ignore it.
Advisors whilst might not have fiduciary responsibility in the legal context of an Advisory Group remain responsible for the professional advice they give and should have professional indemnity insurance cover.
The nature of what is sought should determine the type of people who will comprise the advisory board and the manner in which they need to be equipped and committed to discharge their duties.
The group must clearly define its purpose and desired outcomes. Membership should represent a good balance and have the right chemistry to work their way through various issues that may arise. Compatibility is very important.
There is also the related question of what sort of advice is to be sought. Different people will be appropriate for different tasks, and the “equipment” required to perform well varies by task.
When holding meetings you could go one of two ways. You can either bring the whole group together or you could choose to meet with different advisors separately in a way that makes sense to the issue at hand. It really depends on the business needs and how you want to develop interaction within the group.
The group should function by way of regular planned and structured meetings. Each meeting should have a set agenda; Call to order, Matters arising, Actions progress, Monitoring performance with a reporting dashboard. For this I use the Kaplan and Norton balanced scorecard perspectives of financials, customer, learning and growth and internal processes.
Advisory Boards can be helpful and fulfilling or a waste of time. You will get out of the team what you put into it. The creation, development and operation of the team must be carefully considered and constructed. Select your members wisely as what you select is what you will get!
Members can be walking/ talking testimonials or advertising bill boards for the company’s they represent. They must share your values, mission, vision and interest to develop and grow your company.
In summary Advisory Groups are great additions to many businesses. They are mechanisms to improve your company performance through the addition of different skills sets, fresh ideas and all in a non-threatening open collaborative, consultative, user friendly environment. Advisory groups are a safe harbour for discussing ideas and initiatives.