An Advisory panel (or board) can provide numerous benefits to an organisation, regardless of its size of ownership structure. For SME’s and especially those with a small executive team, an Advisory panel can be an extremely cost and time efficient way to benefit from highly experienced subject matter experts.
Via our Growth Advisory team, we often help SME’s create their Advisory panel, including the Charter (which makes it clear members are not there with governance responsibilities as Directors) and assist with identifying suitable members. (NOTE: We use the term panel to help differentiate from the Board which has legal obligations defined in the Corporations Act).
For those unsure if they should consider creating their own Advisory panel, there are some of the key advantages below;
- Expertise and Experience: Advisory panel members typically possess diverse backgrounds, knowledge, and expertise in various areas relevant to the organisation. Their collective wisdom and experience can offer valuable insights and guidance, helping the organisation navigate complex challenges and make informed decisions. In fact, members should be appointed to focus on a particular challenge or opportunity and some members may only be part of the board for a short period (ie 12 months), whilst others may be there for 3-5 years or more.
- Strategic Advice: Advisory panels can provide strategic advice and counsel to the organisation’s leadership. They can offer fresh perspectives, identify opportunities and risks, and assist in developing and refining strategies to achieve the organization’s goals. Their input can contribute to more effective planning and execution. Importantly though, the Advisory panel reports to the CEO or similar, rather than the CEO reporting to the panel (which is the case with a governance board).
- Industry Insight: Advisory panel members often have deep industry knowledge and insights into market trends, customer preferences, and emerging technologies. Their understanding of the industry landscape can help the organisation stay ahead of the competition, adapt to market changes, and seize growth opportunities.
- Network and Connections: Advisory panel members typically bring extensive networks and connections. These relationships can be valuable for the organisation, opening doors to potential partnerships, customers, investors, or talent. The panel members’ connections can enhance the organisation’s visibility, credibility, and access to resources.
- Risk Management: Advisory panels (or more typically individual members) can assist in risk management by identifying potential risks, assessing their impact, and suggesting strategies to mitigate them. Their expertise can help the organisation proactively address challenges and make informed decisions to minimise risks.
- Mentoring and Development: Advisory panel members can serve as mentors and coaches to the organisation’s leadership team. Their guidance, support, and constructive feedback can help develop the skills and capabilities of key executives, fostering professional growth and enhancing the overall leadership capacity of the organisation.
- Credibility and Stakeholder Confidence: The presence of a reputable and knowledgeable advisory panel can enhance the organisation’s credibility and inspire confidence among stakeholders, including investors, customers, partners, and employees. The panel’s endorsement can positively impact the organisation’s reputation and attract more support and opportunities.
- Objectivity and Fresh Perspective: An advisory panel offers an objective viewpoint, detached from day-to-day operations and internal politics. Their fresh perspective can challenge existing assumptions, encourage innovative thinking, and facilitate critical decision-making processes.
There are a couple of significant distinctions between Advisory panels and governance boards that are also worth considering. Advisory panel members essentially report to the CEO / MD, whereas a CEO / MD typically reports to a governance board (or the Chair). Further, reporting to a governance board likely requires written monthly reports that are formally structured, covering a range of standard topics such as financial performance, HR, regulatory issues and so on. With an Advisory panel, the discussions are often more informal and usually do not require either the preparation of or reading of monthly reports.
Overall, an advisory panel brings collective expertise, strategic guidance, industry insights, and valuable connections to an organisation, enhancing its capabilities, growth potential, and long-term success. And given the (likely) time commitment of a few hours per month per panel member, the typical cost of an Advisory panel is – for a SME – not significant, as the risk exposure for the members is significantly lower than members of a governance board (if the Charter and focus of the Advisory panel is clearly defined, members are not acting as Directors of the company and therefore do not have the same legal obligations as ‘governance’ Directors). Lower member risk and associated expectations reduces the time and cost commitment significantly.
If you would like to learn more about Advisory panels with a view to understanding if a panel may be beneficial to your organisation, please contact james.mcgill@chathamcapital.com.au.
