The advisory board of a company can help in meeting business needs and devising long-term strategies. Effective advisory board members are highly experienced who can bring their expertise to your organization and advise the leadership. They are people who know your industry and have a experience in professional fields like law, finance or marketing. Advisory boards are often made up of volunteers that are eager to assist you. They could be part of the board or external recruits. They meet frequently or semi-regularly. Typically, they meet 6-8 times a year. They may also act as mentors for the CEO and the leadership team.
Typically, members of an advisory council aren’t paid for their time, but reimbursed for meeting expenses. Furthermore the size of an advisory board is flexible which makes it much easier to establish and expand based on the company’s needs. A traditional board of directors is more formal than an advisory board, which can help minimize risk of liability.
It’s crucial that a company set clear guidelines for their advisory committee so that members don’t act like directors on a board and Document Management Systems take on all the obligations. This means writing a written explanation of the advisory board’s duties by way of an executive resolution or in their bylaws. This will make it easier to ensure that they are accountable, and will avoid confusion. As a business grows it’s typical for advisory roles to be more formalized and eventually transition into full board of directors. This happens typically when a business is acquired by investors or reaches an operational level.