Tuning up your advisory board
By Harry S. Dennis III, for SBT
I’ll make another assumption. Your advisory board members are talented business people whose strengths offset your own business shortcomings. Not found on your board are country club cronies or professional service providers.
Let’s look at some things you can do to make the use of your advisory board a "best practice" experience:
Size: Most advisory boards have from three to eight members. The rule of thumb for size is to have your bases covered with respect to the business expertise you would like accessibility to on a regular basis.
Meeting frequency: The best meeting format is a half-day session held bi-monthly. An acceptable format is to hold quarterly meetings. Morning meetings are usually preferred to afternoon sessions.
Board compensation: This will vary depending on your firm’s size, and generalities are touchy business here. Let me suggest that firms under $5 million in sales pay upwards to $4,000 annually and over $5 million in sales upwards to $8,000. A minimum guideline would be $500 a meeting. If anything, you want to err on the high side here.
When you have those "blocking and tackling" fundamentals of advisory boards in place, you can now turn to the real substance behind boards that will enable you to make the experience "best practice" not just in design but also in execution.
Meeting preparation: This is the absolute key to effective meetings. At least a week ahead of time, a packet should go out, containing:
1. Board meeting notice: date, start/end time, location.
2. Meeting objectives.
3. Meeting agenda.
4. Supporting meeting material (financials, business plan update, etc., preferably in "executive summary" form).
5. Key indicators. Let me take an additional moment on key indicators or "K.I.’s" as they are fondly called in TEC. In my company, I refer to them as "magic numbers."
K.I’s are key barometers of business performance. Usually there are four or five of them, and they can be tracked monthly. Common ones are inventory turns, receivables days outstanding, current ratio, debt to equity, backlog, and so on.
K.I’s give you the CEO and your advisors an immediate pulse on how the business is trending and where the potential problem areas lie. They are akin to hooking your vehicle up for a diagnostic systems check. As a board member myself, I can tell you they are enormously valuable to an outsider trying to get quickly caught up on the company.
The agenda itself. Here are six common recurring agenda areas for meeting consideration:
1. Status of capital projects and/or contemplated ones.
2. Progress report on strategic plans.
3. K.I. analysis and trends.
4. Personnel changes.
5. Competition and industry activities.
6. Deviations from current year business plan.
The actual meeting itself. Think of the meeting as three 60-minute sessions, including breaks. If you think of it on this basis, then you will realize how precious the time element is. Here is how a recent advisory board meeting was run:
1. President’s opening remarks and reiteration of objectives
for today’s meeting.
2. Member check-in (news in their lives since the last
meeting).
3. Review of key action items from last meeting.
4. K.I. review and analysis.
5. Discussion of meeting objectives prioritized from most to
least important (usually woven into the six agenda items
listed above).
6. Consensus on key action items as a result of today’s
meeting.
7. Miscellaneous advisory board matters.
8. Evaluation of today’s session: what went right and what could improve?
9. Confirmation of next meeting date, time, location.
Here are some final tips to keep your meeting in the "best practice" category. Have a recorder at the meeting to chart progress on a flip chart, and appoint someone other than yourself to chair the session (so you can participate freely in the discussions).
"Clean copy" a summary of the meeting for your management team. Hold an executive session with them to discuss contents, obtain clarification, and – most importantly – buy in.
Send out a personal note to each board member thanking them for their contributions. If you feel they could have contributed more, take them out for lunch and tell them why.
Review the meeting "what went right/what went wrong" issue summary. Incorporate suggestions in your next meeting. Make sure and tell your advisory board members what you have done and why you have done it to reinforce their contribution to improving your advisory board process.
So much of this is common sense, to be sure. For those of you with advisory boards, I hope you will find a gem or two here to make your board experience more effective for you. For those of you who do not use this great business resource, I have a question: do your competitors?
Until next month, good "sessions" with your advisory boards.
Harry S. Dennis III is the president of TEC (The Executive Committee) in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at 262-821-3340.
Dec. 12, 2003 Small Business Times, Milwaukee
