The function of an advisory board is to offer assistance to enterprises with anything from marketing to managing human resources to influencing the direction of regulators.
[1] Meeting quarterly or biannually, boards can provide strategic direction, guide quality improvement, and assess program effectiveness.
Advisory boards can be implemented in various different areas, including science, medicine, technology, editorial policy, citizen participation, and other topics.
Advisory board members should have distinctive knowledge on different aspects of business such as marketing, product development, and sales techniques that are of use to the directors.
Group dynamics suggests the maximum size for an advisory board is eight members, which takes into account the need for enterprise people and other facilitators at meetings.
Advisory board members can be appointed to specific terms i.e. one, two or three years ensuring them to actively commit to the company and prevent them from getting too comfortable with their positions.
Advisory board members serve an enterprise for a range of reasons, from personal loyalty to direct compensation.
The development of an effective board of directors requires a group of individuals with good chemistry and has the combination of appropriate skills to propel the business.
Enterprises may also find building trust in any person or group to provide on-going and meaningful guidance difficult.
This gives incentives to advisory board members to provide quality advice and ensure that a request for assistance is taken formally.
Thus, an advisory board could be a ‘safe harbor’ for senior executives to seek advice and test business options.
An enterprise may need advice on a particular aspect of its business (such as marketing, product direction, customer service or contact network expansion).
Nevertheless, the compensation for advisory board members depends on various factors, including return of investments, time, organization and cost.
Whereas, an advisory board is not subjected to fiduciary duties or liabilities and therefore could influence the enterprise by providing risky advice.