Archive for the Governance Category
A lot has been written about the need to onboard new managers. The same applies to new members of an advisory board or a board of directors. Orientation will shorten the learning curve and speed-up how soon you receive invaluable advice about issues facing your organization.
Here are six steps to help onboard a new advisor.
- Assign them a buddy. It can be another advisor or a member of your staff. Someone they can go to in addition to the CEO to have their questions answered.
- Have them visit your operation. This can happen early in the recruitment process once they’ve signed a confidentiality agreement. Even if the prospective advisor declines joining your advisory board he now has good information to help you identify others and may change his mind at a later date.
- Provide recommendations on trade shows & seminars to attend. As a consultant on the formation and facilitation of advisory boards I recommend to my clients the need to constantly educate their existing advisory board. For a new advisor, learning more about the industry you are in and the companies you serve early in their tenure is invaluable.
- Provide a list of books & publications relevant to the industry and the issues facing your organization.
- Provide a briefing book. The briefing book should include all the information an advisor may need to refer to from time to time. Don’t assume the information provided during the recruiting process has been retained or organized in one place. In a future post I will discuss what information should go in the briefing book.
- Host a reception to introduce the new advisor to the other members and key staff. This gets the relationship off to a good start and once again will speed up how soon you will receive invaluable advice.
If you have served on an advisory board or board of directors, how were you oriented? What type of orientation would you like to see upon joining an advisory board or board of directors?
Interested in establishing an advisory board? Find out what you need to do, purchase the Advisory Board Kit: A Comprehensive Guide to Establishing an Advisory Board. You can have your advisory board up and running in 90-120 days if you follow the steps laid out in the Advisory Board Kit.
Whether you’re the CEO, an investor or a board member of a business or nonprofit the following questions need to be frequently considered in today’s economic environment:
- How liquid are our cash equivalents? If they aren’t immediately available or you will suffer a loss when you sell, the “cash equivalent” is not really liquid.
- How many days in cash do you have on hand? This means that if cash stopped coming into the organization and your cash expenses continued at the current rate, how many days would the organization last? I read in a recent Inc. article that Jim Collins, author of Built to Last and Good to Great, has enough cash on-hand to last one year.
- What is your current ratio? When you divide current assets by current liabilities, what is the result? Greater than one, you’re OK for the short-term. Less than one and you need to start cash flow triage immediately. Get on the phone with late paying customers, tamper down spending, start paying a bit slower, and defer any non-essential capital improvements/purchases.
- What is the balance on the credit line & when is it up for renewal? If you are fully extended you have no cash cushion for emergencies and you’re in a weak negotiating position on renewal. Take no comfort because the balance is small or zero as you may not have full access. I’ve heard too many stories of banks arbitrarily reducing lines of long-standing customers.
- Where will the year end up? Will you be profitable or will the year end in the red? Ending with a loss will limit what you can do for the foreseeable future. It is something to avoid at almost all costs. Hopefully you have been tracking against an operating budget and know where you can slim down to end the year at breakeven at the worst. It would be prudent to prepare a new forecast looking out beyond the end of your operating year by several quarters. As they say in football sometimes a the best offense is a good defense…if you can’t see the potential for problems because you don’t budget then you’re setting up your organization to fail.
As you read the above questions how are you feeling about your organization? Do you have work to do? Is your board on top of the situation or will your CFO be explaining the unpleasant reality? Now is the time to act.
For years I have preached and sometimes cajoled clients about setting up an advisory board. Today I start a series on setting-up and running my own advisory board. I’m now taking my own advice.
The Process:
I always advise clients start by thinking about the following questions:
- Why do I want an advisory board? What are my goals and objectives for forming a board?
- Am I clear about my vision for my business 2 years out?
- What are some of the unmet needs of my business, including skills sets?
- What do I need to do to make my advisory board most effective?
- What are the benefits to advisors and reasons that they might want to join the board?
- Who can I identify as potential advisors among my colleagues, friends & acquaintances?
- What is the appropriate size of my advisory board to meet my goals and objectives?
- How often do I want to meet? What frequency works for the advisors?
- What am I able to pay advisors: cash, stock or options, expenses, product?
- How long should advisors serve? Should I have rolling terms of service?
- How will I handle an ineffective advisor?
- How will I communicate between meetings?
- What is the appropriate board structure?
- How should I organize & conduct board meetings and distribute the materials?
In future posts I will share my thoughts, fears and successes as well as those of my three advisors. I am fortunate that three long-time colleagues readily agreed to serve when I asked. It will be a privilege to work with them.
