Running a successful business requires a seemingly endless variety of skills and knowledge, and even the most talented CEOs may soon realize that they alone cannot provide all the guidance that their companies need. For most business leaders, creating a board of advisors enables them to draw from a much wider pool of experience and know-how. Successful advisory boards can help you do far more, far more efficiently. They can also illuminate growth possibilities that you might not have imagined on your own.
There are many places to start when forming an advisory board, and there is no industry manual for a single correct method. Perhaps you have faced the same questions that I did when I was searching for advisors for Varsity Tutors, such as: “How many members do I need? What skills should they have? How do I ensure that this is a great partnership?” Here are three pieces of advice that have been helpful for me:
1. Stress quality over quantity
The key to productivity when working in teams lies in quality, not quantity. It might be tempting to invite quite a few people to join your first advisory board. Research suggests that the ideal team has five to ten members, and a great rule of thumb is to begin on the low end of that range, with two or three individuals. For example, Apple (currently holding the #1 spot on Forbes’ most valuable brand list) has a board of directors comprised of eight people. Remember that each of your advisors will have a unique schedule and responsibilities with his or her own company – so the more people on your board, the harder it will be to coordinate schedules and meeting times. Also, as you grow and become an increasingly compelling company, it will become easier and easier to attract talented board members. You don’t want to fill up spots now based only on your existing members when you may be able to attract even more highly talented people in a couple of years.
Limiting the size of the initial board will also increase the likelihood that each board member will be choose to express their particular views. A strong advisory board includes individuals from different operating disciplines – branding, digital marketing, finance/M&A, HR/recruiting, legal, etc. All of these perspectives are important, and it is important to balance each person’s role. For example, if your branding expert is 10th in line to speak, you may lose out on that person’s opinion.
You can also control operating costs by limiting your advisory board’s size. Forming and managing an advisory board involves numerous costs and – importantly – your time. Members are rarely in a position to give of their time totally pro bono, which may mean that your company has to cover travel, lodging fees, and food costs for meetings. If your business is still gaining traction, budget can be a significant consideration when determining how many members to put on your board.
Most importantly, a specific number of advisors will not guarantee your board success. Your company’s trajectory will largely determine the shape of your advisory board – if you have too few members, you may find certain roles lacking. If you have too many, you may experience diminishing returns. Find the number of members that fits the growth trajectory of your company.
2. Set clear expectations
When you are recruiting members for your board, set clear expectations to maximize the chances that you establish a beneficial relationship for both parties. For example, consider if you want to set term limits, and how often you will have meetings. Industry statistics show that the average tenure of a board directors is around eight years – and boards meet, on average, six times a year. Establishing a charter for your board can provide clarity to both you and potential board members on responsibilities, roles, compensation, and meetings. A candidate could decide that they can commit to four meetings a year and gladly sign on to provide guidance and advice. If you fail to provide this information ahead of time, candidates may be less likely to consider the role, as they would be hesitant to commit an indefinite amount of their time.
One way to determine fit is to offer trial periods for new members. Invite your candidate to attend one or two meetings, and then ask your existing advisors for their input. A trial period also allows the candidate to properly assess whether he or she can meaningfully contribute to your discussions. If you or the candidate determines that it will not be a good fit, this trial period gives either party a polite way to decline further meeting invitations.
Equally important is defining the responsibilities of your board of advisors. Typically advisors do not engage in the daily operations of a company, rather the board exists to provide high-level strategic advice and guidance. Remember to value the time of your members, and not overburden them with minutiae. It is the responsibility of you and your team members to execute on strategy, and your advisors are there to provide their opinions on that strategy.
3. Engage each advisor
From time to time, you may lose a board member to other commitments. Just as it can be expensive and time-consuming to recruit and onboard a new team member for your company, replacing an advisor can be challenging. To limit the likelihood of having to do so frequently, try to actively engage each board member. For example, you can ask hard questions about an issue you are facing, or you can assign a project that speaks to an advisor’s specific strengths.
When an individual first joins your advisory board, you can also take the time to find out how and when they would like to contribute. Once you know this information, you can feel confident about approaching the advisor with a request that suits his or her expertise and availability. Be specific with your requests – if you would like an introduction to a certain person, offer a potential time frame for the completion of that task.
One method to give each member an active role is to assign them to committees. For example, common committees could include 1) Compensation and Hiring, 2) Marketing and Sales, and 3) Finance. Giving each member a role enables them to focus their time and discussions. These roles can be matched to each member’s area of expertise, minimizing the ambiguity of having to prepare for anything and everything for an upcoming meeting. Having committees also gives you the benefit of scheduling meetings just for a specific committee, meaning you have additional face time with those particular members.
Both your board of advisors and your business will evolve over time. Your company will likely require different advisors at different stages, and you may find yourself thanking some for their participation and wishing them well. This makes it that much more important to make the most of each member’s time while they are on your board. When you foster an environment that values diverse opinions and respect, and when you support your advisors’ efforts, your relationship can be mutually rewarding.
Chuck Cohn is the CEO and founder of Varsity Tutors, a technology platform for private academic tutoring and test prep designed to help students at all levels of education achieve academic excellence.
This article was written by Chuck Cohn from Forbes and was legally licensed through the NewsCred publisher network.