A company is not a static entity. It is continually growing and evolving and faces different types of challenges and opportunities based on where it is in the business lifecycle, as well as what’s happening in its industry and the broader marketplace.
Because of this reality, a company’s Advisory Board should not be static either. It needs to shift and change to meet the ever-evolving needs of the company it exists to serve
In fact, real problems can arise if an Advisory Board stays static despite changes within the company or externally. If this occurs, the CEO is unable to take advantage of what boards were designed to provide, simply because their board hasn’t kept pace with the company’s needs. And, of course, small problems can quickly turn into crisis situations when a company isn’t receiving the kind of guidance it really needs.
CEOs who view their boards as evolving entities stand to reap the greatest rewards because they never feel “stuck.” Rather, their perspective enables them to embrace change and thus continually grow and shape the board they require.
However, it’s not always easy to make Advisory Board changes. Individuals on an Advisory Board are typically hand-selected by the CEO who likely has formed close relationships board members, perhaps long before offering a board seat.
Here’s how to make Advisory Board changes without experiencing the fallout that often comes with change:
Continually Communicate Goals
Keeping your board up to date on your company’s goals ensures board members not only understand the current objectives they were brought on to achieve, but also to see how the company’s needs and priorities are shifting in real time. Changing needs make a strong and logical case for board changes, which means members are more likely to agree with planned changes, as opposed to taking it personally.
Additionally, individuals take positions on Advisory Boards because they want to make difference and have an impact. If they see their knowledge base or skill set is no longer relevant to the company, they may initiate the exit conversation even before you do. But they can only do that if they are being kept apprised of the company’s changing goals and needs
Limit the Lifespan of Board Positions & Perhaps of the Board Overall
As a business owner, you have a lot at stake and you count on the strength of your advisors to help you make decisions.
Therefore, you must have the opportunity to re-evaluate your Advisory Board members and your board as a whole at regular intervals; ideally, annually.
If you limit the length of each advisory relationship to one year, or limit the length of the life of the board to a specific amount of time or, alternatively, tie the board’s lifespan to the achievement of goal – at which point the board is dismantled because it has achieved its objectives – you are building the opportunity for evolution you desperately need right into the board’s operating policies.
Setting these type of limits also inspires superior board performance (there’s a deadline for achieving milestones!) and prevents Advisory Boards from becoming aimless, un-committal and a waste of everyone’s time.
Create a Culture of Transparency
By definition transparency implies honesty, openness, communication and accountability, and leads to reduced risk and increased profitability.
Companies that establish a culture of transparency have the foundation for making wiser decisions because transparency relies on the free flow of information – including information that is uncomfortable and might otherwise be swept under the rug.
In companies where transparency is part of the culture, having difficult conversations simply becomes core to “how we operate” and, therefore, discussing Advisory Board changes come as no surprise to anyone, least of all board members who likely helped establish the transparent culture and who are seen as models for practicing it.
Assign KPIs & Measure Your Board’s ROI
The primary purpose of Advisory Boards (as opposed to corporate boards which might be focused more on governance) is to achieve desired outcomes faster. This means you must determine which metrics best indicate whether or not the board is doing its job and measure those indicators.
Set KPIs based on overall board goals, as well as for the milestones assigned to individual members.
Exceptional board members exchange their personal time for the opportunity to drive growth and success for a company and they are eager to see the results of their effort in hard data, and enjoy being held accountable. This openness to feedback is part of a high-performing board member’s nature.
Make Mentoring Mandatory
Given an Advisory Board’s role in providing guidance to the CEO, it’s easy to make the assumption that the board doesn’t need guidance themselves.
This couldn’t be further from the truth.
In fact, high-performing Advisory Boards not just happen. They are groomed to operate at that level.
Providing mentoring and coaching to the board as a whole through an outside board development specialist can greatly help in identifying and implementing needed changes in board operations, as well as improve overall board performance metrics.
Additionally, an outside board development specialist can coach the CEO in managing their Advisory Board more effectively – an invaluable asset to even the most board-experienced CEO.
I also recommend providing coaching to each Advisory Board member during which time we can focus on their individual goals, set targets for them to hit, follow up on their progress and assess how they’re measuring up.
Start with a Shortage
You can limit the amount of changes you need to make in your Advisory Board by starting with a smaller board. This scenario enables you to more accurately determine the resources, knowledge and skills missing from your board and also what you will need from the board next when making new appointments.
The alternative is building a large Advisory Board right out of the gate only to realize you did not select the right people.
Even though the core idea is that Advisory Boards are always evolving, it’s far better in the beginning (before you have ascertained the support you really need) to start small, build from there and then continue evolve your board over time.
Respect Relationships & Protect Reputations
Even though an Advisory Board member may no longer be the right fit for your board, doesn’t mean they’ve failed their role or that they wouldn’t be a great addition to someone else’s board. In fact the whole idea of a continually evolving board creates the reality that members will be leaving their seats regularly, and you need to make sure each individual’s board departure is handled in a way that honors their contribution, keeps the relationship intact and doesn’t soil their reputation.
In doing this, don’t assume that merely being kind and respectful is all you need to do. In an ever-evolving Advisory Board scenario, you need to actively manage the transition process and its consequences.
Even if the parting is positive and mutual, your exiting board member will be dealing with outside assumptions, and part of your role is to proactively create positive perceptions about their departure.
Evaluate Regularly to Avoid a Revolving Door
Your Advisory Board does need to continually evolve, but that’s not an excuse for inadequate board management that creates an unproductive revolving door situation where board members are constantly leaving for no good reason.
In the spirit of transparency and good communication, I always dedicate some time at the end of each board meeting to evaluate the meeting with board members and the CEO. We discuss:
- What went well?
- What didn’t go so well?
- How can we improve next time?
- What topics does the board want to know more about next meeting?
- What does the CEO need from the board right now?
This evaluation process proactively manages board performance so that good people who are a good fit don’t end up leaving the board simply because no process for making improvements was put in place.
The Bottom Line
There are too many unproductive Advisory Boards in place in companies today, or Advisory Boards that act as sounding boards rather than active participants in the growth of the company they are in place to serve.
Understanding the role an Advisory Board should play in your company and learning how to ensure the board serves that purpose is paramount, and often an education process. But it’s a process a CEO can shortcut by working with a board development specialist – especially one focused on building high-functioning boards rather than simply designing board processes.
A sign that this type of guidance is needed is evident in the fact that so many CEOs set up Advisory Boards to serve for a long period of time or to provide periodic feedback – which is actually not their purpose.
If you see the high value of having an Advisory Board, seek the guidance you need to do it right.