So, what is an Advisory Board?
An advisory board is a structured and collaborative method for organizations to engage with external advisors. Advisory boards act as a sounding board for either the owners, directors or shareholders of a company.
Advisory boards are useful in scaling businesses as well as larger entities like emerging corporates, multinationals, non-profits, academia and government. A well structured advisory board with best practice principles allows people in the organization to test their strategic thinking and access expertise or connections that may not be readily available via other means.
Advisory boards can go by many different names and can depend on their purpose, scope or even country. Some examples we’ve heard of…
Think Tank | Steering Committees | Project Board | Board of Advice | Business Advisory Panel | Board of Advisors | Advisory Team | Advisory Committee | Advisory Board Group | Professional Advisory Group | Project Board | Planning Board | Consultative Body
Want to learn more about what really defines an advisory board? Here are some additional resources:
Everything you need to know to get
started with advisory boards
Advisory Board Best
The Purpose of an Advisory Board
The purpose of most advisory boards is to help the organization gain new insights and advice to solve business problems or explore new opportunities by stimulating robust, high-quality conversations. The role of an advisory board is not to make decisions, but rather to provide current knowledge, critical thinking and analysis to increase the confidence of the decision-makers who represent the company. An advisory board is different to a governance board or board of directors.
Due to the flexible nature of advisory boards, the scope, or ‘terms of reference’, and advisor roles are chosen to fit the business requirements. The specific roles, responsibilities and expectations are normally established within the advisory board Charter, alongside protocols within the advisory board structure.
What’s the purpose of a board of directors? 👇🏼
Roles & Responsibilities
Advisory Board Roles & Responsibilities
There are typically three key roles within an advisory board structure. These include a Chair, external advisors and internal directors/stakeholders/organizational representatives.
For scaling businesses and emerging corporates, the most common structure is one independent Chair, two external advisors and two internal business representatives (generally the business owner, director and/or CEO). This structure provides a balance of facilitation, external advice and follow-through for implementation.
An example of an advisory board structure:
For more information on advisory board structures, check out our latest State of the Market report.
Larger organizations or corporates may have additional advisory board members. Careful consideration should be given to the overall size and scope of the advisory board to support focus, efficient operation and impact measurement.
Advisory Board Chairs
Best practice for advisory boards is to appoint an independent Chair. The role of the Chair is to establish and facilitate a formal advisory board structure to support effective advisory board outcomes. This may include:
- Establishment of new advisory board structures
- Evaluation of existing Advisory Board structures for effectiveness and best practice
- Facilitation of Advisory Board planning and meetings
- Contribution to Advisory Board outcomes through value-driven insights and advice
- Mentoring to the Business owner or executive
External advisors are appointed by the business for their knowledge and direct experience to problem solve, explore options/concepts and strategic direction. Advisory board participants who are ‘fit-for-purpose’ will be able to actively contribute to the goals and desired outcomes defined in the charter. This may include:
- Contribution to advisory board outcomes through value-driven insights and advice
- Strategic introductions and advocacy within approved guidelines for the organization
Internal Directors & Stakeholders
Internal directors and stakeholders are ultimately the ones to establish (or disband) an advisory board, make the business decisions and follow through on their commitments or implementation plans. Internal directors and stakeholders are directly linked within the business and are often founders, directors, CEO’s, lead investors and other senior executives.
EVERYTHING EVOLVES, EVEN ADVISORY BOARDS
While the advisory board space has started to gain more traction within the past few years, it is already undergoing changes. Specifically, we are seeing new roles appear such as:
- Advisory board manager
- Chair to the advisory board
- Advisor to the board
While we navigate this space, it is important we use the resources available to us. Following our best practice framework, the ABF101 Advisory Board Best Practice Framework™, will provide a guideline for maximising the capabilities of a principles-led advisory board.
Need more information?
Whether you are an organization seeking to establish an advisory board or an advisory board participant looking for best practice guidance, we’re here to help!
Leveraging over 15 years of research and industry consultation, the Advisory Board Centre developed the global first ABF101 Advisory Board Best Practice Framework™. The ABF101 Framework sets out the core principles which are pillars to support organizations of any size to benefit from their advisory board.
As the global professional body for the advisory sector, the Advisory Board Centre is the lead educator and connector for organizations seeking independent advisory board information and engagement. Our value drivers for organizations is to provide a practical way to increase competitiveness, foster innovation and drive economic impact through effective engagement with advisors.
For Chairs & Advisors
The Advisory Board Centre provides professional membership, credentials, market intelligence, advocacy and global connections to professionals who are currently engaged or aspiring to participate in formal advisory boards.
Want to learn more?
Check out our e-learning programs which are fully facilitated and accessible anywhere, anytime. Understand Advisory Board Foundations or discover practical steps to a portfolio career with Executive Transitions. Whether you’re an early bird or a night owl, based in the East or the West – develop your board skills in your own time.