Kings and presidents alike have depended on experienced advisers to help them make difficult political decisions for centuries, and CEOs of the world’s leading public companies trust their boards of directors to help them run their businesses. So why do CEOs and owners of smaller, private companies often go it alone?
Business owners often have trusted management teams that they rely on to make important day-to-day decisions that keep operations running smoothly, but when it comes to making tough decisions about growth strategies, organizational changes or succession plans, those same managers may be inexperienced or less than objective. When the outcome of a decision may mean abandoning a favorite business line or impact their own positions within the company, the best, most-trusted managers can struggle with objectivity. But even if they can remain objective, some managers are too isolated from shifting market environments and changing customer preferences to provide truly valuable counsel.
That explains why so many business owners can feel lonely when faced with the most complicated, business-altering decisions, but it doesn’t have to be that way. More and more business owners are looking outside their companies for expert advice. Small companies and family-owned businesses are finding that advisory boards can be helpful in assisting owners, CEOs and executives as they work through complex issues.
Outside advisers can bring a variety of skills and experience that a small company may not be able to afford on a full-time basis to complement the knowledge and strengths of a company’s own management team. In addition to providing expertise that may not exist within the organization, outside advisers can also be counted on for objectivity. Because they have nothing to gain by paying compliments or delivering flattering but flawed reports, external advisers are likely to share honest feedback that can be especially valuable in making decisions.
When compiling an advisory board, companies should try to identify representatives from various stakeholder groups, such as customers, vendors, investors and strategic partners. It also makes sense to consider appointing professionals, such as accountants or lawyers, who can weigh the financial, legal or regulatory implications of business decisions. Another worthy appointee may include someone who can perhaps open doors in a new market or fortify existing relationships. There is no such thing as Match.com to help business owners identify the perfect advisers. Chances are that the best candidates are people who are already involved with the company in some way.
As for how and when to convene an advisory board, some groups meet quarterly for retreats while others meet monthly over lunch, e-mailing or texting regularly between face-to-face meetings. Regardless of the venue, it is generally agreed that advisory boards are most effective when they are focused on high-level strategic and tactical issues. In other words, make it meaningful. While it may be fascinating to sit around with industry experts pontificating business theory, your most valuable advisers are more likely to attend meetings where pertinent and timely business issues are being discussed and relevant decisions are being made. After all, most advisory positions are pro bono, so other than the occasional free lunch, their reward comes from seeing a business they are involved in grow and flourish. At the end of the day, an effective advisory board can provide much-needed support for business owners and CEOs, so they no longer have to feel so lonely at the top.
John Allen is president and COO of G&A Partners, a Texas-based HR and administrative services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses. For more information about the company, visit www.gnapartners.com.