Learn about what an advisory board does and how it assists organizations throughout the decision-making process.
When athletes want to take their abilities to the next level, they hire a trainer. The athlete brings in someone (or a team of people) who can share their expertise in a specific area and push them to try things they would never have tried before. When your organization needs to rise to a new challenge or has simply plateaued, perhaps it’s time to bring in your own team of experts — an advisory board.
An advisory board is a group of people who lend their expertise, knowledge, and guidance to an organization or company. Unlike a board of directors, an advisory board doesn’t possess voting rights to make significant changes for the organization. Advisory boards offer a consistent stream of outside feedback to help an organization grow and achieve its goals.
What Does an Advisory Board Do?
The primary function of an advisory board is to fill a knowledge gap in the organization. According to advisory board research conducted by the Business Development Bank of Canada, 86% of entrepreneurs with an advisory board say it’s had a significant impact on their business.
Advisory boards provide wise counsel regarding myriad issues that your organization may be facing. An advisory board’s essential operation is to be the impartial third party that can be anything from a sounding board to a watchdog for the organization.
So what kind of topics can an advisory board cover? Some of the issues that an advisory board addresses can hover around the 10,000-foot view of your organization, or they can be quite tactical.
Advisory boards can provide project insight for specifics like technology choices, or they might shed light on your market conditions and buyer personas to help you tailor your product or message to your audience. They can even share their expert knowledge about professional realms outside of your own, like government and regulatory matters.
Advisory boards are not only able to answer questions that your organization has, but they can often answer ones you haven’t thought to ask yet.
Advisory Boards vs. Consultants vs. Board of Directors
An advisory board member may appear similar to the role of a consultant. Both are experts in their fields, and both work with an organization in a part-time or temporary capacity.
There are specific instances when you should use a consultant over an advisory board and vice versa. Consultants provide operational execution and governance assessment, while advisory boards typically take on much broader objectives.
Consultants usually come on board with a straightforward question or issue they need to resolve. They have a set period to take a deep dive into that specific problem and provide their recommendation on how to execute a solution. In contrast, an advisory board’s research is sustained alongside the organization for more extended time periods.
The defining difference between an advisory board and a board of directors — in addition to the voting rights mentioned above — is fiscal responsibility. A board of directors can make financial decisions on behalf of an organization. Advisory board positions exist strictly to share guidance and feedback.
Examples of what an Advisory Board Does
There are several kinds of advisory boards. Yours might be a crossover among several types, but having a well-defined category can be a north star for your team of experts. Types of advisory boards include:
Many types of organizations can use an advisory board, especially in their early stages or during periods of transition. Industries that are significantly affected by the role of advisory boards are:
- Health care
- Higher education
Advisory boards are beneficial in these sectors because they can provide a gut check for business decisions. Advisory board members don’t always have years of experience in your exact field; instead, they can often have skill sets that you need at the moment. Finding diverse backgrounds that meet your specific needs is critical. For example, Gucci created a “shadow board” of younger members who ended up causing a ripple effect through senior leadership and consequently an increase in sales.
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How to Set Up an Advisory Board
The keystone of any advisory board is a clear objective and project setup. When clear advisory board guidelines are set in place, the team is teed up for success. Much like other types of business project management, your advisory board should have a defined mandate, focus, and size before its first meeting. Setting these guidelines will build the advisory board into a set structure.
Step 1: Gather a short list of advisory board members from networks and referrals.
Step 2: Define your pain points through a SWOT analysis (or similar tool).
Step 3: Establish your goals and timelines.
After the logistical parameters of what the board will look like are in place, you can move on to the nitty-gritty of how the board will function — such as its budget, recruitment practices, and meeting frequency.
All these steps might seem like details that would naturally fall into place with any business committee, but being clear sets you up for success. Take the time to put pen to paper regarding the scope, spending, and seats of your advisory board so it can have a long life alongside your organization.
Advisory boards allow your organization to truly push your limits. An advisory board can often serve as a scrimmage court before taking your plays to the market or even the board of directors. Advisory boards can guide you into success with transparent and constructive feedback.
About The Author
- At OnBoard, we believe board meetings should be informed, effective, and uncomplicated. That’s why we give boards and leadership teams an elegant solution that simplifies governance. With customers in higher education, nonprofit, health care systems, government, and corporate enterprise business, OnBoard is the leading board management provider.
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