Henman Performance GroupHenman Performance GroupHenman Performance GroupHenman Performance Group
  • About
  • Consulting
    • Build Stellar Boards
      • Board Assessment
      • CEO Evaluations
    • CEO Selection
    • CEO Transitions
      • CEO Transition Process™
    • C-Suite Selection
    • Culture Construction
    • Healthcare Services
      • Overview
      • First Look
      • OR Efficiency
      • Patient Satisfaction
    • M & A Consulting
      • Overview
      • Buyer’s Strategy
      • Acquisition Strategy
      • The Seller’s Strategy
      • Post Merger Integration
    • Strategy Formulation
    • Succession Planning
      • Executive Development
  • Leadership Development
    • CEO Advisor
    • CEO Coaching
    • C-Suite Coaching
    • Group Coaching
    • Talent Acceleration
    • Team Development
  • Speaking
    • Speaking Overview
    • Healthy Decisions
    • Risky Business Program
    • The Vibrant Board Approach
    • Make the Tough Calls that Shape the Future
    • The Merger Mindset Presentation
    • Challenge the Ordinary
    • Become a Magnetic Boss
    • How to Excel in the Hotseat
    • Take Charge of Change
  • Resources
    • Articles
    • Books
      • Healthy Decisions Critical Thinking Skills for Healthcare Executives
      • Risky Business
      • The Merger Mindset
      • Tough Calls: How to Move Beyond Indecision and Good Intentions
      • Challenge the Ordinary
      • Landing in the Executive Chair
      • The Magnetic Boss
    • Healthcare Services
    • Leadership Tips from Linda
  • Schedule a Call

Advisory Boards Make Dollars and Sense

By: Linda Henman

Boards

There is no substitute for soliciting the opinions of the executive team, the people who will be most affected by change or its absence. However, often the answers to complicated questions don’t lie within those most affected. Frequently the CEO will need to look outside the organization for advice and wisdom. Sometimes this comes for a Board of Directors, a body of individuals that has the duty of influencing a company’s direction. Members of this board have a fiduciary responsibility to represent the shareholders by making pivotal decisions.

Advisory Boards, on the other hand, do not vote, nor do they have fiduciary obligations. Rather, as the name implies, they exist for the sole purpose of advising the CEO and executive team. Small companies, family owned companies, and organizations that do not have a board of directors often find that advisory boards can be helpful in assisting the leadership, but sometimes companies find that they benefit from both kinds of boards.

In the last decade advisory boards have been rather commonplace in the Silicon Valley, particularly for new ventures. However, even though they are relatively inexpensive and easy to form, outside this arena, advisory boards are a valuable, but much underused asset in helping companies handle change. Advisory boards are unencumbered by compliance and other business issues specific to boards of directors, and they can provide the CEO and executive team the benefits of experience, expert knowledge, contacts and credibility that will help them navigate the future of their companies. An effective advisory board can provide expertise that a small company cannot usually afford in full time employees, and it can offer ongoing personal support to those who have the lonely position of CEO.

How do they get started? Because they are free from the regulatory restrictions that shape a board of directors, advisory boards vary greatly in composition and function. Advisory board members are usually chosen for their expertise, experience, and knowledge. A well-balanced advisory board will include 4-7 individuals who have a background in one of the critical areas that affects the business: finance, operations, human resources, business development, marketing, sales, and industry issues. They will be people who are candid, objective, and independent, not friends who will tell the leader what he or she wants to hear.

Recruitment of qualified members usually occurs through acquaintances, either directly known to the CEO or known to existing advisory board members. Some members contribute their time for the pleasure of the stimulation of being involved in cutting edge discussions, but more often, participants are compensated by an annual stipend, stock options, or an hourly fee. According to Corporate Governance, the main attraction for being on a board is the intellectual adventure, the chance to meet with outstanding peers and to discuss issues of the future. It is an honor to be invited, and high quality people attract other quality people.

The purpose of an advisory board is self-evident: it gives advice. So, the members should be good listeners who offer dispassionate analysis about the challenges the company is facing. Share on X They should be sounding boards for the CEO who is struggling with decisions related to anything and everything that touches the company. If they can quickly get to the core of complicated problems, they can offer the leadership a new perspective for understanding implications and consequences.

For best results, the members’ advice needs to be both strategic and tactical. They can assist by anchoring decisions in the company’s vision, mission, and values, but they can also offer specific, step-by-step plans for carrying out plans. They need to be able to separate important from unimportant issues so that they can encourage the leadership to focus their energies, time, and resources on those initiatives that will have the most impact. In short, a successful advisory board will be able to help the CEO see a bigger picture when the temptation is to be distracted by the day-to-day problems of running a company.

This relationship is not one sided, however. The CEO has responsibilities too. First, she or he will usually be directly involved in the recruitment of qualified members. Then, the CEO will need to set meetings well ahead of time and set agendas for the meetings. Most advisory boards have two to three meetings a year, but others meet every quarter. With a start up venture, the board may meet monthly until things are under way. Usually the meetings of the entire board will be half a day or a full day, but often CEO’s find that they need specific advice from individual members more often. Whatever the needs of the company are, the effectiveness of the advisory board is enhanced when expectations are clear on both sides, and the board and leadership can concentrate on the challenges of helping the company’s employees handle change, even if it is unexpected or unwelcome.

Dr. Linda Henman helps CEOs and Boards of Directors set strategies, mergers and acquisitions, plan succession, and develop talent. She can be reached at linda@henmanperformancegroup.com or 636-537-3774.

Helping organizations and individuals achieve a more powerful success mindset.

Contact us to experience the dramatic growth and improvement.

Schedule a Call
Linda Henman

  • You may also like

    Why Directors Need a Board Mindset

    Read now
  • You may also like

    A Stellar Board Starts With the Right People With the Right Mindset

    Read now
  • You may also like

    The Board’s Role in CEO Selection

    Read now
  • You may also like

    5 Reasons CEOs Need Advisory Boards

    Read now
  • You may also like

    Should the Role of Chairman and CEO be Split?

    Read now
Henman Perfomance Group Logo

Sign Up for our Newsletter

© 2025 Henman Performance Group | P.O. Box 7462 Town & Country, MO 63006 | Phone: (636) 537-3774

Website designed by: Go Daxxi

  • Home
  • About
  • Solutions
    • Board Services
      • Build Stellar Boards
      • Director Evaluations
      • CEO Evaluations
    • CEO Services
      • The Henman CEO Assessment™
      • CEO Advisor
      • CEO Transition Process™
    • Speaking
    • M & A Consulting
      • Acquisition Strategy
      • The Seller’s Strategy
      • Post Merger Integration
    • Strategy Formulation
    • Succession Planning
      • Executive Development
      • Executive Team Development
    • Pre-Employment Assessment™
  • Client Results
    • Client List
    • Case Studies
  • Resources
    • Books
      • Risky Business
      • The Merger Mindset
      • Tough Calls: How to Move Beyond Indecision and Good Intentions
      • Challenge the Ordinary
      • Landing in the Executive Chair
      • The Magnetic Boss
    • Leadership Tips from Linda
  • Assessments
    • Coaching Pre-Qualifying Survey
    • Board of Directors Assessment
    • Deal or No Deal Assessment
    • Executive Team Assessment
    • Integration Assessment
    • Strategy Assessment
    • Succession Planning Self-Test
    • Merger Mindset Quotient Assessment
  • Articles
  • Schedule a Call
Henman Performance Group