The advisory board’s presence can help your company fulfill its business requirements and develop long-term strategies. Effective advisory board members are highly experienced who can contribute their knowledge to your organization and advise leadership. They are knowledgeable about your industry and have an academic background in fields like marketing, finance, or law. Often advisory boards are made up of volunteers who wish to assist your organization. They may be currently board members or they could be recruits from outside. They meet regularly, or often. The typical is six to eight times per year. They may also serve as an advisor for the CEO and the leadership.
The majority of members of an advisory council are not paid for their time, but they are reimbursed for the expenses of meetings. Furthermore, the size of an advisory board is flexible which makes it simpler to form and expand based on the needs of the business. A traditional board of directors is more formal than an advisory board which helps reduce risks of liability.
It is important that companies establish clear guidelines for their advisory boards so that members don’t start acting like the board of directors and take on all the obligations. This can be done by writing a formal clarification of the advisory board’s responsibilities in a resolution of the board or in their bylaws. This will help to hold them accountable and prevent confusion. As a business grows it’s typical for advisory roles to become more formalized and eventually become an entire board of directors. This happens typically when a business acquires investors or has reached the point of operation at a certain amount.