How to set up an Advisory Board
How do I set up an advisory board?
An advisory board is an effective way for businesses to access independent external advice to support their business ambitions and strategy. To be effective and sustainable, an advisory board benefits from having a best practice foundation. This allows for a flexible application of the advisory board model to suit the individual needs of the business.
Best Practice Principles
In most countries, advisory boards are not governed by specific legislation. As an independent industry group, the Advisory Board Centre has established research-backed and evidence-based best practice principles for effective advisory boards.
Best practice Advisory Boards include several elements:
- Establishment and Review process
- Advisory Board Charter
- Independent Certified Chair
- Approved Advisors
- Meeting Standards
- Economic Impact Measurement
Establishment and Review Process
A formalised advisory board requires careful planning, preparation and review. An independent advisory board Chair who has been certified in best practice standards can support a business in setting up and facilitating the advisory board. This ensures the advisory board structure complements the internal meeting and decision making eco-system between management and the responsibilities of Directors.
Once established, annual reviews of business and advisory board performance ensures alignment and flexibility as the needs of the business change.
Advisory Board Charter
The Charter is the cornerstone to the advisory board function. A Charter includes the advisory board purpose and scope, meeting protocols and engagement protocols of Advisory Board Members.
Independent Certified Chair
Businesses will benefit from appointing an Independent Chairperson who has undertaken specific professional development in advisory board establishment and facilitation. The role of the Chair is to assist the business to establish the Advisory Board framework and facilitate the Advisory Board function on an ongoing basis.
Best practice for an Advisory Board is to appoint 1-3 external Advisors. Their role is to provide strategic insights and advice to support problem solving conversations
Advisors require the experience, knowledge and acumen that has been identified as a need within the Charter. Advisors also require an understanding of the Advisory Board protocols, roles and ethics guidelines to ensure their roles contribute within the framework and boundaries are managed between the roles of management and Directors.
A formalised Advisory Board is flexible in nature. Within that flexibility of structure, meeting protocols can thrive as they are developed, fit for purpose for the business. Protocols include meeting schedules, board report preparation, agenda format, minute/record keeping and economic impact measurements.
Economic Impact Measurement
Measurement of any Board or Committee performance enables clarity of purpose to the goals or intent of the group. Economic Impact Measurement is ongoing as part of the best practice standards. Measurement prior to the advisory board commencement provides an internal benchmark for the advisory board and the Certified Chair to work from.
Annual Economic Impact Measurement enables the Advisory Board to identify progress and changing needs of the organisation. It provides rigour and a level of intellectual honesty to the independent nature of the advisory board.
The advisory board Charter sets out the intended tenure of the Advisory Board structure. Due to the flexible nature of the advisory board model, the board structure can generally be terminated at any time. Project based Advisory Boards are time specific where the term may be for 90 days to 18 months.
The tenure of individual advisory board members can vary based on the needs of the business. As the needs and priorities of the business shift and change, it makes sense that the members of the advisory board may also change. This allows for independence to be maintained as well as a fresh approach and fit for purpose advisors.
Best practice standards for Advisory Boards is underpinned by independence. This includes several elements:
- The Chair in independent of the business. Therefore, they are not a Director or a service provider to the business.
- The external Advisory Board Members are independent of each other. They are appointed on an individual basis with the business. It is recommended that external Advisors should not be service providers or shareholders. This provides assurance to the organisation that no undercurrent or hidden agenda exists within their Advisory Board framework. Due to the flexibility of Advisory Board structures, this may vary.
How can the Advisory Board Centre help my business?
The Advisory Board Centre provides a practical pathway for businesses to increase competitiveness, foster innovation and drive economic impact through effective engagement with Advisors.
Our professional development and education programs set the standard in independent Advisory Board education. Businesses can also access the Advisor Concierge service. The Advisor Concierge is a guided service that aims to connect businesses to highly experienced Board Chairs and Advisors for Advisory Board engagements.
The Advisory Board Centre provides membership, certification and best practice training for Board Chairs and Advisors. When you are engaging strategic Advisors in your business- look for the logo: