The Pros and Cons of Advisory Boards

 It is all about talent with (KEP) facts, execution and collaborative teaming on everyone's part.

In the large organizations, besides corporate board, there are multiple advisory boards or steering committees, which act either as strategic advisor or governance body, however, there are also controversial perspectives upon their performance, are they truly effective in purpose, or do they just add more layers of hierarchy in decision making or leading to micro-management as well.

 The positive aspect is that the advisory Boards do provide the collective insight and expertise for the subject matter. None of the decision makers have all of the required KEP (Knowledge –Experience- and Performance) for every subject they deal with. So having the cross-functional team that can provide the expertise and fills the gaps is of monumental value. The effective advisory Boards would roll up sleeves and help management understand and explore markets, business operations, geographies, etc., and act as sounding boards for big, risky or speculative ideas that aren't yet ready for the senior executive team to present to the Board.

The negative aspect is that ineffective committees are typically triangulating things and create more problems than solutions. Management typically feels board committees or advisory boards are dealing with operational issues already delegated to them, and they micro-manage sometimes. When such micro-management happens, it gives management a pass on accountability. For example, one committee makes this recommendation, the other makes another recommendation, which creates operational issues due to non-compatibility or operational conflicts that they cannot see by operating in silos.

Advisory Boards serve a fundamentally different role than true Boards: It is important that the role of the board and the direction of the board are carefully defined. Committees usually reduce the Board's “30,000-foot view” by breaking up the information they need to have to make strategic leadership decisions and delegate oversight responsibilities for the organization. However, it's important to be careful for a corporate board to rely on an advisory board or committee too much because they need to spend the time educating themselves so that they can have sufficient knowledge on strategy oversight. It's also important for a board to make effective governance, not allow management to use an advisory board, committee or consultant to shift operational responsibility. Boards should be willing to spend the time to be competent enough to develop the strategy and oversee operational performance as well.

The trick is planning, strategies, choosing the right people and managing them coherently. If done right, the advisory committees can be very effective in plotting new directions and providing multi-stakeholder perspectives. The collaboration between these leadership teams needs to boil down to assurance that personal bias is eliminated, group polarization is analyzed, they are not ego driven and that the unmet or unidentified needs of the employees - customers are met; and in the end, they provide the shareholders the best possible result for their investment. It is all about talent, with (KEP) facts, execution and collaborative teaming on everyone's part, as it is a lot of hard work to complete all that is required to achieve "Best In Class" business performance.

Posted in: Board Room,Future of Leadership,Talent Master