Effective Advisers

Determine the Objective of Your Advisory Board: Advisory boards can be general in scope or targeted to specific markets, industries or issues, such as adopting new technology or going global. They provide timely knowledge about trends and competitors as well as aid in identifying upcoming political, legislative and regulatory developments. They can help you enter new businesses and look at your own operation with an open mind.

Advisory boards can also be made up of customers and prospects who provide insights into product development and marketing issues.

Choose the Right People: Of course, when forming a board you need to understand its purpose, but you also need to know what specific skills to seek. In general, look for diverse skills, expertise and experience. You want members to be problem solvers who are quick studies, have strong communication skills and are open minded.

Big names can be a bonus ... but not always: Getting a heavyweight on your board of advisers can give you credibility, but it’s also important to have members who are going to spend the time to give you thoughtful advice or are well connected and willing to make introductions.

Set Expectations: When inviting a prospective member to join your advisory board, you should lay down the ground rules about what is expected in terms of time, responsibilities and term of office. Specify the areas in which you’re seeking help.

If the advisory board is going to discuss issues that include private information, members should be asked to sign a confidentiality agreement.

Compensate Your Advisory Board: Depending on whom you are asking and how involved you need them to be, compensation can vary from just providing food at your meetings to covering expenses to stock options to cash payments to a combination of the four. Keep in mind that your members will likely benefit from the experience in a variety of ways. Being on your board will expose them to ideas and perspectives they may have otherwise missed. It will also expand their own networks and provide them with a way of giving back.

Get the Most Out of Advisory Board Meetings: Prepare for meetings well in advance. Choose a site that is comfortable and free of distractions. Careful thought should be given to developing the agenda and managing the meeting. Solicit input for the agenda and distribute important information ahead of time. Run the session as you would any professional meeting and follow it with an action plan.

The meeting facilitator should know which experts to draw out and how to

The minutes should be typed up and circulated to your company’s top management. The notes should include the board’s recommendations on key issues.

Ask for Honesty: An advisory board must be open and frank, so don’t be offended if you hear things you don’t like. Your board will also suggest ways of correcting the problems it identifies.

If appropriate, encourage members to tell you about their mistakes, so you can avoid making the same ones. You can learn a lot by finding out what other people did wrong.

Consider Alternative Methods of Feedback: Getting the entire board together on a regular basis may not be possible. Instead, meet or conduct conference calls with specific board members about topics relevant to their areas of expertise as needed. E-mail is a great tool for reaching everyone on your board and it allows your board members to respond to you at their convenience.

Respect your Board's Contributions: Don't abuse or waste their time. Listen to what the board says. Sometimes, as business executives we are so close to an issue, we can’t see the forest for the trees. But remember: This isn’t a corporate board, so you don't have to do everything they suggest. Ask yourself, "Does this work for my company? Am I comfortable with that?" Then make a decision.

Keep Board Members Informed: Once they’re on the board, keep members excited about your business by giving them updates at times when you aren't soliciting their advice. The fact that they've agreed to be on your board means they care about your company, so keeping up-to-date will help them be of greater value to you. Remember that these people are evangelists for the company.

The author is a business strategist and president of Stengel Solutions, available online at www.stengelsolutions.com. She can be reached at (212) 362-3088.