What is an Advisory Board? In the most practical terms, an Advisory Board is a…
How does an Advisory Board work?
Granting businesses direct access to the latest ground-breaking innovations, cutting-edge business intelligence and valuable strategic insights from some of the very best minds, an Advisory Board can be a source of invaluable advice and mentorship for businesses looking to accelerate their strategy.
If you’re considering if an Advisory Board could be a good solution for your business, first you’ll need to understand how an Advisory Board works.
What is an Advisory Board?
An Advisory Board refers to a structured, collaborative method for organisations to engage external advisors. An Advisory Board is a group of accomplished professionals appointed by a business to provide strategic advice and insights.
Where a business lacks a specific skillset internally, is struggling with groupthink or is seeking input to solve a difficult or complex problem, an Advisory Board acts as a sounding board to support internal business decision-makers with critical thinking, robust analysis and strategic insights.
While an Advisory Board may provide pivotal advice and support to a business, the independent members of an Advisory Board do not have any fiduciary responsibility and are not authorised to act or make decisions on behalf of the organisation.
Who would you normally find on an Advisory Board?
An Advisory Board typically consists of a Chair, independent Advisors and senior managers or executives from within the business. The independent Advisors on the board can hail from a range of professions and industries and could include industry leaders, successful entrepreneurs or connected executives.
It is at the discretion of the business to decide who they would like to appoint to the board. Whether the business is in most need of legal, financial, growth, supply and logistics, technology, marketing, sustainability or human resource management advice, the composition of the board can be adjusted according to current business requirements.
While the number of members on an Advisory Board will vary according to the size and complexity of the business, smaller businesses generally only require two or three advisors while larger businesses may require more.
When is an Advisory Board most useful?
An Advisory Board can support a business by providing ongoing strategic advice or by providing advice in relation to a specific scenario.
Most businesses who engage an Advisory Board are looking to accelerate their strategy, getting where they want to go sooner. Some other scenarios where an Advisory Board can be markedly beneficial include:
- Growth of the business.
- Expansion into new markets.
- Organisational change and transformation.
- Handling a major crisis or critical incident.
- Tackling a specific business problem.
In each of these scenarios, an Advisory Board will add value by providing sound advice and mentorship to business leaders to approach challenges, threats or opportunities from a confident and informed position.
You can find out more about when businesses need an Advisory Board here.
How often does an Advisory Board meet?
Most businesses conduct between four and six half or full-day meetings per year.
How much will an Advisory Board cost?
The cost of an Advisory Board can vary based on a range of factors including the size of the business, the number of board members, the level of involvement required and the rates charged by individual members.
The Advisory Board Centre 2020 -2021 Advisor Engagement Market Rate Analysis Report found that the expected annual investment by organisations in their Advisory Board is between $40,000 – $70,000.
The investment reflects the most common Advisory Board structure including monthly meetings with the Business representative and independent Chair and quarterly meetings with external Advisors. Individual businesses would tailor their investment to suit their business needs and budget.
You can find out more about how an Advisory Board is compensated here.
How can the Advisory Board Centre help?
The Advisory Board Centre is an independent professional body for the Advisory sector. The Centre was founded to support and improve the effectiveness of the global Advisory Board sector, including the professionals who fulfil an Advisory function and organisations for whom they serve.
We provide education programs for organisations, certification for Advisors and the complimentary Advisor Concierge service.
If you are exploring an Advisory Board for your organisation or considering joining an Advisory Board as a member, the ABF101 Advisory Board Best Practice Framework™ is a helpful resource.
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