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For centuries, kings and presidents alike have depended on experienced advisors to help them make difficult political decisions, 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?
“Most business owners typically have trusted management teams that they rely on for day-to-day decision-making, but when it comes to helping make tough decisions about growth strategies, organizational changes or succession plans, those same managers may be inexperienced or less than objective,” said Tony Grijalva, founder and CEO of G&A Partners, an integrated HR and administrative services company.
Grijalva points out that when the outcome of a decision can mean abandoning a favorite business line or impacting their positions within the company, even the best, most trusted managers can struggle with objectivity. And even when internal managers can remain objective, often they are too isolated from shifting market environments and changing customer preferences to provide the most valuable counsel.
That may explain why so many business owners have traditionally felt lonely when faced with the most complicated business-altering decisions, but it does not have to be that way. Today, more and more business owners are looking outside their companies for expert advice. Small companies and family-owned businesses often find that advisory boards can be helpful in assisting owners, CEOs and executives as they work through complex issues.
Outside advisors 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 advisors can also be counted on for objectivity. Because they have nothing to gain by paying compliments or delivering flattering, but flawed, reports, external advisors 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 appropriate appointee may include someone who can perhaps open doors in a new market or fortify existing relationships. There is no website like Match.com to find the perfect advisors. 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, emailing as needed in between face-to-face meetings. Despite the varying venues, 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 interesting to sit around with industry experts pontificating business theory, your most valuable advisors 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 with which they are involved grow and flourish.
At the end of the day, an effective advisory board can provide ongoing support for those in the lonely position of CEO so they no longer have to go it alone. To learn more about how to establish an advisory board for your company, contact Tony Grijalva at 713-784-1181.