Unless you already know everything there is to know as a leader and you’ve already experienced everything there is to experience in business, you can benefit from an advisory board or a corporate board of directors. You guessed it—everybody can benefit from a board.
Corporate boards and advisory boards can effectively serve businesses of all sizes, in all industries, and at all stages of growth. Whether you would be best served by a corporate board of directors, a personal advisory board, or something in between, however, depends on your specific needs, goals, strengths, and weaknesses. By understanding how corporate boards and advisory boards serve organizations, you can assess their fit with your organization.
Advisory Boards 101
Advisory boards, as their name suggests, provide advice and counsel, which includes coaching and mentoring. Working with an advisory board is a great way to learn about best practices that others have developed along with efforts that haven’t worked so well. Advisory boards are excellent sources of experience sharing, allowing veteran leaders to share what they’ve been through in the past to help current leaders avoid making the same mistakes.
Advisory boards are usually made up of about five members and include people who have experience relevant to your industry or needs. They’re experts on the subject matter they advise on. The mix of people you need on your board varies depending on your company’s stage of growth. Because your needs as a business leader are dynamic, your advisory board will likely evolve over time.
From a structural standpoint, advisory boards are typically more informal and smaller than corporate boards of directors. Their meetings are more casual and less frequent, and they don’t necessarily vote. Advisory boards usually don’t have formal oversight responsibilities, but they do provide accountability.
Understanding Corporate Boards
While any individual or organization can have an advisory board, corporate boards of directors tend to serve public companies, nonprofit organizations, or organizations with significant outside capital investment. Corporate boards of directors operate at a high level with significant governance, judiciary, and fiduciary responsibilities. They usually answer to the company’s shareholders and have prominent public visibility as well.
Corporate boards typically include more people than advisory boards. Board members are elected to serve designated terms, and they usually receive compensation for their services. Like advisory boards, corporate boards are made up of individuals who offer distinct expertise on the business, its industry, or a certain operational area.
Corporate boards of directors follow formal procedures with legally established bylaws and documentation. They have formal and often inflexible meeting schedules compared to advisory boards. Processes, agendas, obligations, and decisions tend to be set in stone for corporate boards; their services to the business don’t evolve as much as the offerings of advisory boards.
Common Benefits of High-Performing Boards
No matter where you are in your career or what stage your company is in, you can benefit from an advisory board or a corporate board of directors. You may even benefit from both; you might turn to a personal advisory board to coach you on your next career move while a corporate board of directors serves your company and leadership team as a whole. Both offer specific skill sets, experience, and accountability.
The type of board you’ll benefit from most depends on your needs. Advisory boards can provide companies with vital input during certain stages of growth, like a brand-new, pre-revenue startup or an established company expanding its product line. On the other hand, when your company goes public, you’ll likely be required by law to implement a formal board of directors.
To serve your organization to its full potential, advisory boards and corporate boards alike need an environment of psychological safety, a thoughtful board matrix, and leadership buy-in. They both thrive with a sense of community. When you establish a high-performing board built on cohesion and trust, defined processes, clear roles and responsibilities, and respectful communication, your company will enjoy the benefits of your board’s outside wisdom, expertise, and experience.
The Future of Your Board
Input from a high-performing board of experts, whether a formal corporate board of directors or a temporary advisory board, can make all the difference in your company’s success, especially when you face adversity, uncertainty, or unprecedented growth. As a business leader, you’re responsible to equip your organization accordingly by assembling and empowering your board.
Questions to Consider
- Do you have an advisory board to hold you accountable?
- Does your board have the right mix of wisdom, experience, and expertise?
- Does your board have a clear purpose and agenda?
I’d love to help you and your board take the next step forward, whether that’s identifying your needs, appointing members, or setting goals. Contact me if you’d like to learn more.