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Published 03 May 2024
In this executive insights webinar we dived into the topic of “The Role of the Chair” with our CEO Udo Doring and Certified Chair™ Jan Easton, FABC (Fellow of the Advisory Board Centre).
Together, they explored the application of advisory boards within governance systems and the value created through the implementation of best practice.
Below, we summarise the key points from the session and share access to the full recording for those who missed out.
1. Organisations are implementing advisory boards within their governance systems to maximise opportunity and minimise risk.
2. The flexible, yet targeted, focus of advisory boards allow for an increase in stakeholder engagement, diversity of perspective and informed decision making by executives and directors within any size organisation and in any operating environment.
3. Organisations are increasingly seeking expert guidance to support the formation and facilitation of their advisory structures to align to best practice.
Within a best practice environment, the role of the Chair may include:
Udo Doring shared several use cases of advisory boards in practice and the guidance provided by the Advisory Board Centre. He highlighted the global reach of the Advisory Board Centre and the professional member community.
Organisations that are implementing a new advisory structure, or seeking to improve or enhance an existing board, are encouraged to contact the Advisory Board Centre for targeted advice and support in best practice implementation and connecting with experienced board level Chairs and advisors.
Professionals that are seeking to engage in advisory boards as part of their portfolio are invited to explore a supportive, collaborative global network committed to best practice and ethical engagement within the professional membership body.
The ABF101 Best Practice Framework™ is an excellent starting point – underpinned by its three pillars of purpose, process and people. The ABF101 Framework is designed to meet the needs of new and established organisations, reflecting the dynamic and unique nature of individual organisations and the advisory community that supports them.
If you are a professional seeking to enhance your boardroom skills, we invite you to explore the Certified Chair™️ Executive Program. Our expert facilitators lead virtual and in-persona programs globally.
Jan Easton: Welcome, everyone. Thank you for carving out some time in your day to join myself. My name is Jan Easton. I am a Certified Chair and a Fellow of the Advisory Board Centre and I’m also a member of the global faculty. I’m pleased to be joined tonight on the webinar with our CEO and a fellow chair, Udo Doring. Welcome, Udo.
Udo Doring: Thank you, Jan. Wonderful to be with you and good morning, good afternoon, good evening for everyone joining.
Jan Easton: That’s right. We’re broadcasting out to a global audience. I’m based in Australia and Udo is joining us from Hong Kong, and so welcome to every from wherever you may be joining us.
Tonight we’ll be talking as part of our Executive Insights webinar series on the importance of the role of the chair and we’ll primarily be looking at this through the lens of advisory boards.
I want to share a little bit about who we are at the Advisory Board Centre. In case you are not aware of the work that we do. We are the global professional membership body dedicated to supporting advisory professionals and the organisations that they serve. We have a clear focus of the activities that we undertake, around the advancement and adoption of best practice in the advisory board sector. Our core activities include research, education, professional development and advocacy.
This allows us to work across a wide range of stakeholders from individual practitioners that are looking to develop their own advisory portfolio or support organisations at a board level that are looking to enhance their governance systems and implement advisory boards. We also work very closely with government, academia, industry bodies, and regulators to be able to help inform their view of how advisory boards can enhance overall governance systems.
Our membership base expands internationally, and we welcome some of our members who may be here joining us tonight.
I mentioned that one of our core activities is research and our flagship research publication is the State of the Market Report, which provides a very broad and deep understanding of the state of the advisory board market, both for organisations that are adopting advisory boards and professionals that are looking to add advisory as part of their portfolio offering. If you haven’t had an opportunity to engage with the content of the report, I encourage you to go to our website and download the report now.
We’ll look at some of the key things that sit within the State of the Market Report, which really help inform the importance of the role of the chair when implementing and facilitating an advisory board. One of the key things that the State of the Market found is the adoption of advisory boards across all sectors globally has really seen a marked increase in the market.
And this really calls into focus the importance the role that the chair can play when we see that advisory boards are being used across a lot of sectors in lots of different ways. How do you create a situation that has impact as well as really good governance around that framework? And from our belief, all roads lead back to the quality of the chair, the person that will be supporting the evaluation, the implementation, and ultimately the facilitation of the advisory board.
And that’s what we’ll dive into in tonight’s discussion. The State of the Market also found that there are really three broad types of advisory boards or applications of advisory boards in the market.
There are advisory boards that work within the business sector. And so these are organisations that are primarily still founder -led or owner -led, generally up to a certain revenue benchmark. They tend to have relatively straightforward governance and decision -making structures. An advisory board is often a very powerful tool for them to be able to engage with external insight and advice to really enhance the critical thinking and ultimately support quality decision -making within that organisation.
Where we’ll spend most of our time talking about tonight is the role of advisory boards within more of a corporatised environment. Corporatised advisory boards are when you use an advisory board structure within an overall system of governance to really enhance the strategic objectives that the organisation is trying to achieve.
Project -based advisory boards are a specialised application of advisory structures. Project -based advisory boards are limited in either scope, in time, or both. They really have a defined and limited purpose.
As we go through the content tonight, Udo is going to share with us a couple of different use cases that highlight some of the application in a corporatised and project -based environment.
When we look at the lens of what’s going on in the corporatised market, and this is really a major growth area of where advisory board adoption is really rapidly increasing, there’s a really key driver that is fuelling this- the governance dilemma.
This is the challenge that’s faced by organisations that are having to adopt and respond to rapid changes in the market, rapid changes in legislation and rapid changes in consumer expectation. And often this falls on the shoulders of the governance board to ultimately make decisions around the strategic direction for the organization.
The agenda is getting bigger, but governance boards are getting more constrained. And the constraint comes both from limitations in their size, increasing regulation and purely from a time, skill and experience standpoint.
If an organization is moving into uncharted territory and the skill set or the experience of the directors don’t align, how do they close that gap? This is one of the areas that’s driving the adoption of advisory boards within a corporatized environment and really underscoring the importance of the role of the chair. When we look at the traditional view of where advisory boards were utilised by organisations, it was seen very separate to what might happen within their governance board. Advisory boards at their core are a problem solving model, they’re there to be able to provide insight and advice, to be able to support the critical thinking of the decision makers in the business. With the increased adoption in a corporatized environment, we’re finding that advisory boards are being used more and more within a system of governance.
The role and information exchange between the advisory board and the governance board is becoming closer and it’s really mapping out how that works to enhance governance, not to increase bureaucracy, not to increase the governance dilemma that organizations have. It’s ensuring there’s a really harmonious and value added way for these two structures to work together.
Within a corporatized advisory board practice, there’s really some key drivers of what is happening in use cases of advisory boards. These are around areas specifically of organizations meeting their ESG requirements. They might be undergoing a change or transformation process. I was actually just shared a piece of information today around how many digital transformation projects fail within organizations and how might that be done better, and there’s certainly a growing adoption of advisory boards to support that particular use case. Customer advisory boards, international markets, and Udo, I look forward to you sharing a little bit of your direct experience having been based in Hong Kong and China for a number of years about how advisory boards are being utilized by organizations to support international markets/. These are all examples of how advisory boards are used in a corporatized environment. What can sometimes add to the complexity is an advisory board might be referred to by many different names.
An advisory board is a very common term. However, they may be referenced as committees, councils, a reference group, a forum, and even a think tank. When looking at the adoption of an advisory board, it’s important to look at what is the purpose of the structure and how is it used rather than just what is the name of the structure. We are seeing more and more advisory board formats coming into corporatized markets in committee style structures. And the role of the chair to be able to get the best out of that is incredibly important.
Udo, I’d like to invite you into the conversation. And we’ll look at one of the potential use case applications around advisory boards within the government arena.
Can you share a little bit of your experience there?
Udo Doring: Thanks, Jan. I thought it would be valuable to cover a few different examples in this space. And perhaps it gives a bit of a line of sight on the agility or the flexibility that the advisory board sector does see when it comes to the applications, remembering that distinction between governance boards and advisory boards.
The first example that I thought we’d explore is a regional government agency that was looking at establishing a small business council. Essentially, the remit of the advisory board or the advisory panel was to inform policy as it relates to small and growing businesses within the region. One of the key factors was making sure that there was representation from right across the region.
In this particular example, the chair was actually the minister that was responsible for small business in the government. The rationale behind that was the intent of the advisory board was to inform policymaking. And so the want of the minister and the minister’s office was to make sure that there was an unvarnished communication pathway from industry directly into the minister’s office.
Where we talk about the role of the chair, it was really important that it was the most significant stakeholder and that they were actually in the room and actively engaged in the situation.
That’s one example of the way that advisory boards are used within government. What we often find in that space is it will be an internal stakeholder that is the chair and their role is to facilitate and evaluate those considerations. Again, no decisions are made in the room but it’s really about collecting information and opinion.
The second example that I thought would be interesting to unpick within the goverment base was a large infrastructure project that is underway across multiple jurisdictions. And the advisory panel is tasked with two broad roles. One is mediation and the other one is facilitation of considerations and recommendations to the government authority that include all stakeholder views. So if you can imagine, the infrastructure project is a multi -year project that crosses a lot of borders and will require pretty critical negotiations with multiple landowners and then stakeholders as well. This advisory panel was was made up of independent experts that can’t have been related to any of the projects and any of the procurement and any of those suppliers previously.
They have to have technical expertise. Now, the chair in this particular instance was to not be a technical expert, but was to be an independent facilitator and mediator, so that was the core skill sets that they were looking for. Ultimately, what was happening within those advisory board meetings or those panel meetings was any disputes that couldn’t be internally resolved would be deferred to this body to work through what had been considered, following due process, and then looking at other considerations that may find a different consideration or resolution that hadn’t yet been considered by the various stakeholders.
Recommendations would be made to the ultimate government authority to make the decision from there. The chair, in this instance, made sure that experts were drawn upon, advice was distilled and considered, and then recommendations were made to the authority. Independence was the key tenet in this setting.
Jan Easton: You really highlight some key considerations that we’ll cover off a little bit. How does a chair actually do that? How does a minister switch from their role as the minister to then chairing that advisory panel and draw on different skill sets? But also the important work that must be undertaken in scoping out how that advisory board might work and how it might fit within the other governance systems within the organization.
Udo Doring: I think they are absolutely key points to make because what you’re you find in those situations is that switching hats can be a challenging shifting of gears. And then the orientation and the establishment of advisory boards in these settings are really important because everyone needs to be on the same page.
Jan Easton: And you’ve got some examples of multinational advisory boards as well that you can share with us.
Udo Doring: I do. Given the international flavour of the audience, I thought we’d travel to a few different jurisdictions and explore some of the applications of corporatised advisory boards when it comes to that multinational setting.
The first touches on that example or the statistic that you mentioned earlier, Jan, around that digital transformation. So a large pharmaceutical company looking at establishing an advisory board to inform digital transformation for the organisation. Now, a bit more context setting, the organisation has significant capability when it comes to digital and digital transformation. transformation, so dedicated teams that are expert and best in class.
The reason why they were looking at establishing an advisory board was to bring the outside in. What have we not considered? What have the internal norms just meant that we’ve accepted without perhaps challenging? And /or what can we learn from other examples and other organizations and industries working through the same or similar examples. So this is a very international advisory board that we supported the establishment of and draws upon advisors from different continents and different industry sectors.
So a really interesting mix of experience and scope. So it’s a large advisory board as well and so what we do observe when it comes to corporatised advisory boards, oftentimes the size of the advisory board will be larger than we see perhaps in the business sector and /or even government. So when I say large, I’ll quantify specific somewhere between the 13 and 15 people in every advisory board meeting. And it’s because of that in this particular instance they actually nominated and after going through a process around understanding what the absolute goal was but also contextualizing what would a chair need to know to be able to effectively facilitate these meetings and get outcomes from these meetings they actually nominated in internal chair to facilitate the process. And that was done because of institutional context. It would be a really difficult task for an external chair to get up and running in terms of ongoing projects, considerations, departments, titles, without having that internal context.
This was really about making sure that the key skill set of that chair was facilitation. How do we make sure that we draw on everyone in this meeting and then how do we make sure that we can also then move on from particular conversations and not get bogged down in a particular thematic or issue where it’s not going to be productive for the ongoing conversation.
So really, really important in terms of that facilitation and they landed on someone that was really effective in that space and experience.
The next example I thought that would be interesting to unpick was a large FMCG business that had international operations in China and they had a newly appointed CEO in the market. They had absolute trust in the CEO, but they also had a realization that they were new to market and they wanted to make sure that they were giving support that was really contextualized and on the ground.
They established an advisory board that was in market, so based in China and it was specifically focused on two factors. So making sure that they were identifying potential opportunities in market, but also then that they had a robust lens on risk mitigation. And that was a key focus. So the chair was appointed and they were a person that had experience in the sector, non -competitive, but had some experience to be able to draw on. One of the interesting points in this particular case study is the communication channels. They made a decision early on that the advisory board would report directly to the CEO of the global organisation.
It was both the chair and the China -based CEO that would report in. So nothing was privileged in terms of the conversation. Really understanding communication pathways within a corporatized advisory board setting is important because it can absolutely determine the effectiveness of an advisory board. So the chair here, again, independence was key, but really industry and regional context was the other factor that they were really looking for.
The third example that I thought I’d draw on very quickly is a large mining organization that is looking to establish an advisory panel to inform three elements. Environmental impact, local community engagement, and legacy. Essentially, the want from the company is to say, “We want to do things differently. We want to make sure that where we establish a mine, the legacy is positive”. How do we make sure that we build that into all of our planning and our DNA as an organisation before we touch anything in terms of shovels in ground?
The chair here is actually one of the governance board directors. So they have context in the community and they understand the industry and the board wanted again to input from an advisory board that is dedicated to those issues to be able to inform the overall strategy of the organization. So unvarnished and direct input into the governance board.
Jan Easton: That’s excellent. And I’m really pleased that you provided the variety of examples because what it shows is that the role of the chair in the very first instance, it’s important to understand the context. The context of how the chair is expected to operate, the context of the organization’s operating environment and their overall governance system.
What we know though, that is common or standard across the role of the chair are really three key functions. It’s the establishment phase of the advisory board It’s the facilitation of the advisory board itself. And it’s being a partner in the evaluation of the impact and effectiveness of the advisory board and potentially the rescoping of where that might sit in the organization.
In the establishment phase, the role of the chair is looking at what is the purpose of the advisory board and what is its scope. What is the advisory board there to do and where are the boundaries? And this is often established through that very important process that you highlighted, Udo, around the governance mapping. How does the advisory board and the outcomes of the advisory board or the advice of the advisory board flow through the organization to then ultimately support the critical thinking and decision -making made within the organization?
Stakeholder engagement, who needs to be considered in the discussions around the establishment of the advisory board and then ultimately who may need representation on the advisory board. And the example that you gave in the government context where the stakeholder engagement was incredibly important both looking at what were the needs of the government, what were the needs of the specific department and then what were the needs of the participants on the advisory board to ensure they had representation.
Ultimately, the formation of the charter is something that the chair will generally have a role in, or certainly in a review process if you are coming into an already established advisory board, making sure that the advisory board operates in accordance with the established charter or terms of references, it may be called. Supporting the profiling of members. Who else needs to be on the advisory board in that establishment phase? And this is often linked to that process that you shared, Udo, of being able to define, well, what are the objectives? What is the purpose of the advisory board? And then what are the voices, skills, experience, profiles that we need around the table? to be able to support that? And ultimately, the chair will support in that establishment phase, helping to consider the definition of the communication strategy around the advisory board. How is the advisory board purpose and role communicated internally?
And how might it be communicated to the market if it is? Some advisory boards are very much for a– outward facing market context. And some advisory boards are a little bit more of an internal strategic initiative. For example, the example that you shared around the digital transformation advisory board is very much an internal focused advisory board, not necessarily something that’s promoted out to the market. The role of the chair in that establishment phase is incredibly important because it’s what sets up the advisory board and ultimately, the advisory board members for success.
When we look at the facilitation role of the chair, being able to support this requires a flex of a different set of skills. So when I go to your example of the advisory board within government, the support that that organization needs to do the establishment phase was different to the role that they needed of the chair in the facilitation phase. So they needed to be able to draw on skill sets of a chair to help with the establishment, but then ultimately the minister was going to be doing the facilitation or an internal representative was going to be doing the facilitation. So when we look at the distinct, I guess, activities undertaken by the chair in that facilitation phase. This can include the member orientation, the sponsor engagement. Who within the internal organization is ultimately the sponsor? That could be the board, it could be the CEO, it could be an executive. Helping to work out on some of the hygiene factors around this, around schedule, agenda and reporting, making sure there’s clarity around that and what is the process. The meeting protocol, so actually within the meeting, what is the culture of this advisory board and then what are the protocols that we enact to be able to get the best out of the people around the table?
Supporting member contribution, so making sure to be able to maximize the impact of the voices around the table. And also a mentoring element, the role of the chair in that facilitation phase is often such a key person in being able to help the organization to then synthesize the advice that was given by the group and bring that back and do something with it within the organization.
We often see that the chair has more frequency in their interaction with the organization to be able to support more of that mentoring role. Now what’s really interesting in the State of the Market report is that it identified the growth of a specific role that is being created within corporatized environments.
And that’s of the advisory board manager. And so this is quite similar to, or I guess the equivalent might be the company secretary role within a governance board. So who is that person internally that might be able to support the schedule, agenda and reporting collation of the advisory board. In the absence of this, certainly the chair will want to take much more of a supportive role in ensuring that the organization meets its requirements around this, but it’s a really positive sign in the market that we are seeing the role development of an internal representative to be able to enact these things.
The third element around the role of the chair is this very crucial evaluation phase. Being able to support the organization to not just facilitate that advisory board but to actually take a periodic step back to say are we meeting the intended impact that’s aligned to the purpose of the advisory board? What is that impact measurement? This will vary from organization to organization, depending on what the scope and purpose is of their advisory board. There may be financial impact measures. There may be social impact measures. There may be internal productivity impact measures. The governance mapping- is the advisory board still fit for purpose? Is it meeting the needs within the governance system or has something changed or evolved? Do we need to reassess that? What is the return on investment? And this is both important, whether the advisory board is commercially engaged or whether it’s just the investment of time, energy and resources in supporting the advisory board, is the organization getting the return that it deserves on that investment? Certainly doing this is a process at a minimum annually. The timeframe of that may be shortened if it’s more of a project based advisory board that has a shorter scope and ensuring an alignment to best practice.
Best practice alignment is something that I’d like to talk a little bit more about because it’s really key to the role that the Advisory Board Centre plays in the advancement and adoption of best practice advisory boards.
The ABF 101 Advisory Board Best Practice Framework is an initiative of the Advisory Board Centre, with the first edition released in 2020 and we’re coming up very soon to the release of the third edition, which includes a review of the content to ensure that it’s current and meets the needs of organizations in all operating contexts and in all jurisdictions.
It focuses on a principle -based approach to what does good look like in an advisory board context. The Advisory Board Best Practice Framework is underpinned by five key pillars. Udo, you alluded to a couple of these when you were talking about concepts like independence. But but I’ll just start to walk through because I think it’s really important that if you are either considering an advisory board for your organization or you’re considering participating in an advisory board either as a chair or a member, that you get a really good understanding of best practice and how it applies in that context.
The advisory board best practice framework is a freely available document. We want to make make sure to socialize this out into as many contexts as possible.And it underpins the education and advocacy efforts that the Advisory Board Centre does. If we look at the main elements of best practice, its purpose, its process, and its people. And I’ll just share with you very briefly the five key pillars that underpin that clarity of scope. What is the intended purpose of the advisory board and what is the edges or the guidelines around that advisory board?
When we look at it from a process standpoint, understanding the structure and discipline of how the advisory board operates and what is the measurement framework to then be able to evaluate the impact of that advisory board and whether or not it’s continuing to serve its purpose.
On the people side, two key principles are the concept of independence. So what does independence look like in that operating context? And you shared a couple of different examples of the importance of independence.
Udo in the environment where the chair needed to be fully independent because it was around the rigor of the process. But other times independence might be if it’s an internal representative independence of thinking to their role of facilitating the advisory board and ensuring that the members of the advisory board are fit for purpose. Do they their skills experience and perspectives aligned to the intended purpose of the advisory board to add value.
Its the application of that best practice which forms the foundation to the Certified Chair Executive Program. Part of our advocacy efforts in the market from the Advisory Board Centre when organizations are looking to implement an advisory board for the first time or enhance the outcomes of an existing advisory structure is we will always recommend that they start with a good quality chair and the chair can help them with that very crucial implementation phase, the facilitation phase, and the evaluation phase of the advisory board.
The Certified Chair program is the way that we support practitioners globally to enhance their understanding of best practice and enhance their understanding of how they can bring their unique skill sets to the role of the chair.
And Udo, this is a program that we deliver globally. We have some upcoming international programs as well. Do you want to share just a little bit about some of the upcoming dates or upcoming locations?
Udo Doring: The program will be delivered in June in both London and Toronto, for those that have joined the call or the event from those parts of the world.
And then again, we’ll be back in Dubai in October and in Singapore in October as well. So there’s a number of programs scheduled in different parts of the world for the remainder of the year. For those that are joining in Australia, we have a relatively consistent schedule in the major cities in Australia as well. So if anyone is interested, we certainly do have dates listed on the website.
Jan Easton: What’s really important about the chair program is to underscore the investment that individuals are choosing to make in their own understanding of best practice. Even those that may be very experienced at chairing either governance boards or chairing internal meetings and facilitating internal meetings, it’s… it’s the recognition that when you bring it into that advisory space, that problem -solving space, it requires a different understanding and a different skill set. And it’s really positive to hear the strong feedback that we get in the market from our members. This is just an example of some feedback from the lovely Werner Boeing who’s based in Europe.
A couple of key action items that we’ll be sharing with you, the State of the Market report and ABF101 Advisory Board Best Practice Framework so that you can download that and begin to explore how that might fit.
If you’re an organization that is looking to implement an advisory board or enhance your advisory board, we strongly encourage you to review both the state of the market report and the advisory board best practice framework and then get in contact with the Advisory Board Centre if you need some additional support looking at that implementation phase or you’re looking at engaging with a certified chair or advisory board members. If you’re an individual that’s looking to enhance your advisory portfolio or start participating in the advisory board space there’s a couple of different options of how we can support you as a professional membership body.
Udo mentioned that we’ll be delivering the Certified Chair program. We have global delivery options, including both in -person and virtual, and I’ll include some of that information in the follow -up email that we send to you.
The most important thing is please stay engaged with us. We share quite a lot of information around best practice, what’s going on in the advisory board sector, through our social channels and through our website. If you aren’t already following us on LinkedIn or have signed up for our newsletter, I certainly encourage you to do that. We look forward to supporting your curiosity around advisory boards at the Advisory Board Centre.