In spite of open-door policies, two-way communication, and the various other information exchange practices that business owners employ, at one time or another most entrepreneurs lament that it can be lonely at the top. When the buck stops at you, you can't escape the feeling that you're expected to have all the answers, and if you don't, you had better hurry up and find them.
This is where advisory boards come in handy, says Chuck Wilson, NSCA executive director. Some systems integration companies are starting to look to businesspeople from outside the industry for an objective outlook. "As we put together our companies and look at the growth patterns, we've come to realize that we may need some expertise from a different environment, be it from construction management, the design community, general counsel, or even your banker," he said. "This gives you a whole different perspective on your company, and allows you to share best practices that are used outside of the systems integration community."
An advisory board is different than a board of directors, underlines Priscilla Cale, director of the family business program at the University of Connecticut in Storrs, CT. Boards of directors have a fiduciary responsibility to the company, whereas advisory boards do not. "Having that advisory board serves to validate the idea and decisions of the owner, and it also serves to propose some alternatives," she said.
Steve York, president of York Electronic Systems in Broken Arrow, OK, has not only served on advisory boards for Oklahoma State University, Tulsa Community College, and the Tulsa Technology Center's Advisory Committee; he has also enlisted advisory boards to counsel his own operation. York believes that the main role of an advisory board is to play devil's advocate. "They should help us to be accountable," he said. "We want people to give us the answer to our problem. The fact of the matter is all they can do is make recommendations. They've got to help remind you that, at the end of the day, you are the one who is ultimately responsible to captain your ship and make things they way you need them to be."
Pick And Choose
Cale notes that when seeking advisory board members, business owners should examine where they want to be in the next five to 10 years, and then enlist someone who has already grown their own company to that point. "If you are looking to grow from a 50-person operation to a 100-person operation in five years, then you might want someone who has managed 100 to 150 employees," she said. While there is no magic number in terms of how many people should sit on the board, Cale believes that for small businesses, having more than five runs the risk of having too many cooks in the proverbial kitchen.
Wilson cautions against enlisting "yes men"; if anything, advisory boards are much more useful if they are made up of people who do not think like you, and who won't agree with everything you have to say. Seek out those with the expertise that you don't possess; for many systems contractors, this means finding individuals who work in finance, human resources, and even the legal profession.
Cale has seen compensation for board members range from $400 to $3,000 per day, with larger companies shelling out as much as $25,000. "You should be compensating them based on the value that they bring," she said. In the systems integration industry, Wilson notes that the members of advisory boards are often simply reimbursed for their out-of-pocket expenses, and some receive a small honorarium. However, not all board members do it for the money; many simply like to see their experience put to good use. "They want to feel like they are worth something outside of their own businesses," Cale said. Some companies have made charitable contributions on behalf of their board members as compensation.
Prepare Yourself
If you make the effort to set up an advisory board, you must be ready to listen to what its members have to say. Wilson advises that business owners appoint someone else to facilitate the meetings, so that they can focus their full attention on the advice they are receiving. Most importantly, business owners need to be open to criticism. "It's so easy to get frustrated about what they have to say. What do they know about our industry?" Wilson said. "The point is, they don't know anything about our industry, and that's why they are there. We know about the industry; they know about business. We are very good about technology, but the business issues have become more complex. We need outside perspective on that."
"Before they begin it, they need to be ready to receive feedback," Cale agreed. "They are going to have to be ready to hear, 'Maybe your son or daughter isn't the best person to run this company.'"
