Advisory Board Procedures

eHow
July 11, 2011

An advisory board is a group of independent experts or consultants who act as a sounding board for a company, organization or governmental agency. The advisory board offers advice for various aspects of business, and they serve as a watchdog, keeping corporate executives answerable to a third party. Unlike a board of directors, the advisory board has no legal fiduciary responsibility or authority over the company. They simply offer their expertise and represent the community.

Functions of Advisory Boards
Advisory boards serve many different functions, depending on the executive’s objectives. Some may be called in for a specific task, like launching a product or hiring new staff. Others are retained for regular advisement meetings. They may give advice about cutting costs, product development and branding. They may serve as networking intermediaries, introducing the executive to valuable clients, investors and suppliers. They may also be community figureheads, eliminating a company’s appearance of isolation in a community and making the executive accountable to community members. Whatever the case may be, advisory boards all serve in different capacities, so there is no hard and fast procedure for conducting advisory functions.

Types of Advisory Boards
Only about 30 percent of small businesses have advisory boards. These advisory boards often operate with informal discussions. In large corporations, boards of directors fulfill many of the functions that an advisory board would. Universities often form student advisory committees to touch base with the student body and give the sense of oneness between students and administration. These boards may have a specific function, like student fees allocation. When the board deals with specific functions, there are usually strict institutional procedures for offering recommendations that include review of materials, meetings with administration and deliberations.

Governmental Advisory Committees
According to the Federal Advisory Committee Act, or FACA, governmental advisory committees advise officers and agencies in the executive branch of the federal government. The FACA excludes committees made entirely of federal government employees, local civic groups whose purpose is to render a public service and state or local boards established to advise state and local officials and agencies. Federal government advisory committees are strictly regulated. Members are appointed by the Department of the Interior, charters are granted by Congress, minutes must be kept at meetings and meetings must be open to the public.

Forming an Advisory Board
Advisory boards can be formed independently, or the task can be outsourced to business solutions consultants. The organization should begin with a goal of determining if the board is a permanent fixture, or its function is to meet a specific goal. Members should be carefully selected with areas of expertise and valuable contacts in mind. Though advisory boards are less formal than boards of directors or federal advisory committees, they should be governed by written agreements, which include a charter spelling out responsibilities, meeting times and compensation, if any exists. They should also include nondisclosure agreements where appropriate. Advisory boards should be mutually beneficial to the members and the organization. Members are not driven to service by money, but they should be compensated for travel expenses and provided with meals at meetings.

References
“New York Times”; How to Create an Advisory Board; Adriana Gardella; February 17, 2010
Business Insider: How to Build the Best Advisory Board for Your Company
Texas A&M University: Student Service Fee Advisory Board Standard Operating Procedures
National Archives: Federal Advisory Committee Act