Here’s The Right Way To Put Together An Incredibly Smart Advisory Board

(By Paul B. Brown)

You don’t want to have someone on the board just because they tick a box. But if you are in your 40s, you probably do want someone in the 20s and someone in the 60s on the board. All men or all women is a bad idea. So is only having people who have always lived within 100 miles of one another.  What is a good idea is having people of different tempermanents. Aggressive risk taskers and extremely conservative folks should be represented.

I know. I know.

I used to have the same reaction to the idea of having an advisory board as you do.

See if my old rant on this sounds familiar:

“I should have an advisory board? Really. I am putting in 90 hours a week trying to make this company, my company, a success and you want me to bring in a bunch of people who don’t know my business and pay them to give me platitudes? Really? No thanks.”

And if that is how you are thinking of advisory boards–dilettantes or retired business people with nothing else to do who prattle on saying nothing original, then I agree with you.

But why why would you ever create a board like that?

After all you want a board:

1. To give you a new perspective. Yes, you are successful. But you don’t have a monopoly on good ideas.

2. Because when you get successful, you tend to get into a rut.  The board can help you to continue to try new things.

3. Because they give you someone to talk to about the problems you face. That is no small thing.

4. Because they can provide honest feedback.

How do you go about putting together an effective board and how should it function?

Let’s take the questions one at a time, beginning with who you want on your board.

– You want smart, creative problem solvers who have a proven track record of success.  Sounds obvious, right.  If you think about the advisory boards you are aware of, you will realize that this approach is not always followed.

– The people on the board should NOT work for you. No employees.  And you don’t want your banker, lawyer, or accountant on the board either.  They have an extremely vested interest in telling you things you want to hear.  (They want to keep their retainers.)

– There should be diversity in the truest sense.  You don’t want to have someone on the board just because they tick a box. But if you are in your 40s, you probably do want someone in the 20s and someone in the 60s on the board. All men or all women is a bad idea. So is only having people who have always lived within 100 miles of one another.  What is a good idea is having people of different temperaments. Aggressive risk takers and extremely conservative folks should be represented.

– Must they be from your industry? I know I will catch flack on this, but no.  Most business problems–hiring; distribution; marketing–are universal.  If you are in the shoe industry and you insist on only having board members from the shoe industry, you are needlessly limiting yourself.  If they are not from your industry, aren’t you limiting networking possibilities?  Probably not. You’d be amazed how many folks successful people know or can get to.

–How many people on the advisory board?  I would suggest six to eight.  Fewer than six and you won’t get enough ideas. More than eight and the meetings become hard to control.

–Do you have to pay these folk?  Absolutely.  It needs to be enough so it is not insulting–maybe a couple hundred dollars an hour for their time, or somewhere around $1,000 to $1,500 a meeting–but not so much that they will be attending the meetings for the money.  (If you want to offer stock options and/or equity, it is up to you.)

How do the meetings work?

The general advice is that you want to meet quarterly.  More frequently, and the board gets caught up in the day-to-day running of the place and less frequently gives too much time for small issues to become big ones. I think the logic is right, but you can get away with having three meetings a year instead of four.

At the meetings, I think you need to do three things as a matter of course.

First, you deal with business issues.  (Sending out an agenda ahead of time is a good idea so your board members can think about the issues that are going to be discussed.)

Second, you want to have some kind of formal mechanism to handle mentoring (of your top people–and you.)

Third, some sort of team building exercise for the board. It can be as simple as everyone having dinner together or formal exercises.  You want to turn your advisory board into a high performing team, in the same way you want to turn your employees into a high performing team.

Now, let me be clear about this. You want your board’s feedback and ideas but you don’t have to take it.  You get the final call.  Still, when the board is constructed in the right way, they can be a valuable source of ideas.

Maybe you should consider it.

(Source: Forbes)

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