How To Form a Board of Advisers

By Indeed Editorial Team

Published July 21, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A board of advisers can significantly improve the quality of an organization's decision-making. Regardless of your role within the company's management, knowing how to form a board of advisers can help you identify the right professionals for the role.

Forming a well-run board of advisers can be an important career milestone, but it requires research. In this article, we discuss what a board of advisers is, what it does, how to form one and provide tips on the best selection practices.

What is a board of advisers?

A board of advisers is a group of experts who are relevant to an organization's well-being and that help its management teams make more informed decisions, with the ultimate purpose of improving the company's business outcomes.

They are neither company employees nor board directors and their role best resembles that of a mentor, in the sense that they prioritize the company management's interests over other shareholders. Given their role and the fact that most of them are well off financially, advisers often invest in the companies they advise.

Related: Differences Between Board of Directors vs. Board of Advisers

What does a board of advisers do?

Some of the most commonly performed tasks of a board of advisers are:

  • Give advice regarding the organization's overall strategy, business model and positioning on the market.

  • Give advice on various key aspects of the business, such as product creation and user acquisition.

  • Connect with potential investors and introduce the company and its products to them.

  • Develop relationships with key customers and represent the company in their relationship with them.

  • Work with the management team to improve presentations and pitch decks.

  • Provide counsel and advice for various employees when they experience issues that may affect their productivity.

  • Help management and the human resources department identify and recruit key personnel.

Related: How To Get a Consulting Job

How to form a board of advisers

Consider following these steps if you intend to form a board of advisers to help your organization:

1. Establish an overall purpose

Before starting to form a group of advisers, you should clearly define what its main purpose is. This implies performing a thorough analysis of the company's dealings, identifying knowledge gaps and using the newly acquired information to determine the kind of people that would eventually be a part of your advisory board.

2. Find people who are in contradiction with your beliefs

Although it may be tempting to recruit board members who reflect your beliefs and overall worldview, not having a board of advisers that constantly challenges your decisions can be detrimental to the organization. Ideally, an adviser's main priority is the entrepreneur's well-being and this can result in having opposite views on how to do certain things.

For this reason, recruiting close friends or family members to a board of advisers greatly depends on the type of relationship you have with them and their ability to look out for your best interest, even if it means contradicting you.

Related: 11 Ways To Achieve Career Advancement

3. Use your network to identify potential board members

Finding the most appropriate people to form your board of advisers can be a difficult task, as you need to identify those with the right skills and personalities. The best way to find these people is usually to use your own professional network, as it makes it easier for you to assess their professional and personal qualities and determine if they are compatible with the role of an advisory board member.

After making a shortlist of potential board members, you can start contacting them directly and carefully assess whether they'd be a good fit. Besides their technical skills and personality, you should also assess how effective would communication be with each of them and how strong their desire is to help you.

4. Make sure you protect your company's privacy

Once you've selected the members of your board of advisors, the only way in which they can be effective is if they're aware of confidential information regarding the company, such as trade strategies, business plans and intellectual property.

Given the highly sensitive nature of these documents and the fact that the role of a board member can end at any time, you should make sure that all members sign nondisclosure and conflict of interest agreements.

5. Create a performance-based compensation plan

Although advisory board members aren't typically motivated by money, you should figure out ways in which to compensate them for their effort. Depending on the size and scope of your organization, the various forms of compensation can vary from paid meals and travel expenses to financial bonuses for when the company meets various strategic objectives.

6. Keep the number of board members limited

Having too many members on the company's board of advisers can be detrimental to the organization's well-being. Instead, an advisory team with three to five members should provide enough skills and expertise to help management overcome various challenges.

You should also be flexible regarding those selected, as the organization's goals and challenges may change over time, making some of the skills of board members redundant. Setting term limits and constantly reevaluating each board member's relevance can help you avoid these situations.

7. Make sure the board of advisers has all the information it needs

A board of advisers' expertise can only be used to its full potential if they have all relevant information required to make an informed decision. You should set internal procedures for other company departments, to make sure that critical information, such as financial statements, business plans and various reports are also shared with the board of advisers so they can analyze them before meetings and provide their feedback.

Related: 7 Careers for Financial Advisers

Tips on forming a board of advisers

Consider these tips when looking to recruit an advisory board:

  • Ask for recommendations. Use all the relevant people in your professional network and not only consider them for a role within the advisory board but also ask them if they can recommend anyone that would fit the role.

  • Find what motivates each candidate. As mentioned earlier, most board members aren't financially motivated, so you should explore their motivation and use it to challenge them.

  • Choose varied board members. It's usually best to have a diverse group of board members, with different experience levels, professional aptitudes and general views, so they can deliver a wide range of perspectives.

  • Find people with proven track records. The most appropriate people for boards of advisers are usually those with very high achievements in their fields who are looking to share some of their expertise.

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