CHALLENGES AND POTENTIAL OF BOARDS OF ADVISORS AND BOARDS OF DIRECTORS FOR ALL COMPANIES

Article by Herb Rubenstein

Introduction

Boards of Advisors and Boards of Directors for all companies, nonprofits, and educational organizations can provide great value for the organization in their earliest years and whenever the organization wants to grow and improve their success. Many leaders of organizations would say they don’t have a board of directors or board of advisors composed of “outside members” (people who are not employed by the firm), because their organizations are too small, they don’t have the time or money to create one, or don’t think anyone would be interested in serving on such a board.

These statements are simply false. In America, and likely in most countries around the world, if a company, nonprofit or educational institution is producing good products or services, or wants to produce good products or services, there will be people who will want to help them succeed, and will volunteer to help them succeed.   And, when we look at the people who are leading organizations, and what they do on a daily basis, we can see that these people truly need the help of a volunteer board of director or board of advisors because these organizational leaders spend an extraordinary number of hours working IN the business or organiation, but often spend little time working ON the business or organization.

Frankly, many organizational leaders often have few of the skills, experience, contacts, business and organizational planning and finance capabilities, human resource knowledge, contract, negotiation, and sales training necessary to make their organizations financial successes. Boards of advisors can supplement the skills, knowledge, and efforts of organizational leaders to help them be more successful.

This article takes a stab at some myths that currently serve as barriers to the formation of helpful boards of advisors or boards of directors. By reading this article you may be able to embark on an effort that can pay huge dividends in improving your business or nonprofit. Sure, by creating a board of advisors or board of directors you will be asking for advice from others, and that can get messy, but it need not cause any problems whatsoever. What is essential to know is that there are many people with real business and organizational expertise that will help you and your organization grow and reach its potential. Read on.

Just Who Leads Companies, Educational and Nonprofit Organizations?

Many organizations are started or run by one or two “visionaries” who are extraordinary people. These leaders are often:

  • Focused
  • Intense
  • Driven
  • Problem Solving Oriented
  • Accurate and Precise
  • Organized
  • Able to Work in Isolation
  • Confident
  • Self-Centered, Control Oriented
  • Research/Fact/Analytically Insightful
  • Detail, Precision, Measure Oriented
  • Impatient, Always On to the Next Thing

Not all of these characteristics fit everyone who leads organizations. However, it is clear from this list that to make a company or organization very successful, the organization needs more skills and knowledge than the leaders often possess. That is where a board of advisors or board of directors can pay huge dividends for organizations of all types.

Killing Myths: A Road to Progress

This article will attempt to destroy the three myths that often stop or hinder companies, nonprofits, or educational organizations from starting and having useful boards of directors and boards of advisors. These myths are:

  1. Organizational leaders would not be great conveners or managers of boards of advisors or boards of directors for their organizations.
  2. Such a board would not provide much value to the organization.
  3. These types of boards require a lot of time, effort and expense to set up and to support on an ongoing basis.

Debunking Myth Number 1

It does not take a human resource specialist to set up a board of advisors. In fact, it takes only a couple of hours, and the steps are very simple. They are:

  1. Identify skills and expertise that your organization needs that it cannot readily buy.  Create a list of these skills and expertise and begin looking for people with them to ask to serve on your organization’s board of advisors or board of directors.
  2. Create a one-page set of “Expectations of Members of the Board of Advisors.” This one pager would include how many meetings (from one to six meetings a year, possibly 12, but that is pushing it), what the agendas for the meetings will include, and a paragraph describing the compensation, if any, that will be paid to members of the board of advisors. Compensation for a member of a board of advisors could simply be some discount on the products or services of the organization, business referrals, public acknowledgement, etc.
  3. Set the number of advisory board members you would like (usually between five and fifteen) and create a list of potential advisory board members.
  4. Call them and invite them to consider attending an exploratory meeting, usually a dinner, to consider being on the advisory board.
  5. Set the date for the meeting, invite the participants, set the agenda for the meeting, hold the meeting, and that’s it.

These five steps could take as little as one to two hours. So, myth number one that you might not be very good at setting up a board of advisors that can produce real value for your organization, has been debunked.

Debunking Myth Number 2

The second myth is that boards of advisors and boards of directors are a waste of time for most organizations.

To disprove this a myth, below I provide a list of just some of the actual benefits that boards of advisors and/or boards of directors can provide to organizations.

  1. Identify and help secure new customers – particularly those with a strategic interest in the success of the organization
  2. Identify and help recruit new, highly qualified employees
  3. Identify and help secure new sources of financing and capital
  4. Provide independent advice regarding the organization’s business plan, products, services, prices, customer service, etc.
  5. Provide public relations support
  6. Help with human resource issues – help the CEO with serious personnel issues
  7. Help finding space to rent or buy
  8. Assistance in putting into place a supply chain with agreeable cost and terms of delivery and payment
  9. Assistance in finding legal counsel, accountants, payroll services and back office support
  10. Assistance with competitive intelligence
  11. Assistance with mentoring a CEO and senior staff
  12. Provide valuable contacts in the business community
  13. Valuable contacts in the general communities in which they operate
  14. Valuable contacts in the university and educational sector or other areas of expertise useful to the organization
  15. Help generate invitations for speaking opportunities for organizational leaders
  16. Co-authorship of articles
  17. Advice on accounting issues
  18. Recommendations regarding the organization’s marketing plan
  19. Provides loans of equipment, office space or conference room space
  20. Provide advice on how to improve customer service or the product or service that the organization will offer in the future
  21. Assist in getting real feedback and constructive criticism from customers and other forms of customer relations management support
  22. Recommendations on strategic partners
  23. Recommendations on conferences and events to attend
  24. Recommendations on organizations to join
  25. Recommendations on how to structure contracts with employees
  26. Recommendations on how to share equity with employees or acknowledge employees
  27. Recommendations on how to secure donations or investors in the organization
  28. Provide leadership development training for the CEO and senior staff of the organization
  29. Help set realistic, stretch goals for the organization
  30. Advise company on potential merger and acquisition opportunities or strategic alliance opportunities
  31. Assist in improving the reputation of the organization in the community
  32. Advise the company on a volunteer or contribution strategy that can pay dividends for the organization
  33. Advise the company on human resource retention policies, pay scale and help negotiate terms with specific employees
  34. Suggest new business models for the organization
  35. Provide consulting and bench strength to the company when it is stretched thin but can not hire additional full time personnel.

This list of 35 benefits that a board of advisors or board of directors can provide is illustrative of what an organization should ask of its board of advisors. This list shows there is a great potential return on investment in creating a board of advisors or more formal, board of directors

Debunking Myth Number 3

The third and final myth is that boards of advisors and/or boards of directors take a lot of time, effort and expense to set up and to support on an ongoing basis. Boards can be set up in just several hours of time. On going support, be it monthly, quarterly or bi-annual meetings will take some effort to coordinate. However, getting ready for a board of advisors’ meeting should not take long because organizational leaders should know how to report quickly to the board of advisors what is going on in the organization and should know what to ask for in terms of help from the board.

So, creating and supporting a board of advisors or board of directors need not take huge amounts of time. Meetings can be one to two hours.

Conclusion

Henry Ford once said, “Whether you say you can do something or not, you are right either way.” This is the case with boards of directors and boards of advisors. If you say it is too much hassle, too large of a cost, that no one can help your business, and no one would want to anyway, you are probably right. And if you say that our business could benefit from others looking at what we do, giving their advice, making suggestions, and I know exactly the 5-9 people who would make great members of a board of advisors or board of directors, and they would love to join such a board and would get a lot out of it, you are also probably right.

I hope by reading this article you will explore whether a board or advisors or more formal board of directors could help your organization be more successful.

About the Author

Herb Rubenstein is a Lecturer in the Graduate School of Business of the University of Colorado Denver. He is co-author of Breakthrough, Inc. – High Growth Strategies for Entrepreneurial Organizations (Prentice Hall/Financial Times, 1999), co-author of Leadership Development for Educators (Rowman and Littlefield, 2009) and author of Leadership for Lawyers (American Bar Association, 2008). He has been an Adjunct Professor of Strategic Planning at George Washington University, and has been an Adjunct Professor of Entrepreneurism at George Mason University and Colorado State University. He has written extensively on boards of advisors and boards of directors, business and strategic planning. He has his law degree from Georgetown University, his Master of Public Affairs from the LBJ School of Public Affairs, a graduate degree in sociology from the University of Bristol in Bristol, England and was a Phi Beta Kappa/Omicron Delta Kappa graduate from Washington and Lee University in 1974. His email address is herb@sbizgroup.com and he can be reached at (303) 910.7961. The website for the company is www.herbrubenstein.com. In addition, he trains people and organizations in leadership development and you can learn more about his work at www.leadershipforeducators.org and www.leadershipforattorneys.org.

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