The benefits of having an advisory board over board of directors may include and, but limited to the following:
- Distance control
Multinational companies have local companies running their business in a particular foreign jurisdiction for lower costs e.g. tax, price of raw materials, and organizational benefits. However, giving authority to an outside group of directors in the local company may increase risks and instability of the multinational corporation. Since an advisory board can operate in a different location, with different cultural and business norms, in a different language, multinational companies may choose to have an advisory board instead of a localized board of directors in order to avoid loss of control.
- Accountability
Our advisory board helps provide accountability to keep you on track with your overall business goals. Knowing that you will be expected to report on your progress at the next meeting creates the positive peer pressure needed to achieve more.
- Preparation for board of directors
Companies may choose to have an advisory board before they have a board of directors. 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. Having our advisory board allows you to assess the commitments and capabilities of each individual and observe the chemistry between them before appointing them to a board of directors.
- Higher efficiency
A large board of directors may grow to an unmanageable size where organizational complexity and communication breakdown may occur, leading to ineffective and inefficient function of the board. An advisory board, without the complexity of authority involved in board of directors, may work more effectively compared to a board of directors that grows in size as the corporation grows.
- Formal advice
The complexity and speed of enterprises often make it difficult to seek advice on any particular topic. Enterprises may also find building trust in any person or group to provide on-going and meaningful guidance difficult. Our advisory board can then provide the degree of consistency, longevity, background knowledge and provide reliable advice on particular issues.
- Less pressure on executives
Executives can express partially defined or tentative view to an advisory board since advisory board’s sole purpose is to provide advice. This allows them to “test-drive options” before they face the board of directors which demands definitive and assertive business decisions. The board of directors assesses the CEO and establishes his or her compensation. While an advisory board may induce change in the company for the benefits of the company, a board of directors inducing change in the company could suggest a lack of confidence in the senior management team. This imposes great pressure on senior executives and could become a barrier for senior executives to express their issues and seek advice from the board. Thus, our advisory board could be a ‘safe harbor’ for senior executives to seek advice and test business options.
- Focused input
You may need advice on a particular aspect of your business (such as marketing, product direction, Leadership, customer service or contact network expansion). While board of directors need to take into account of all aspects and go through a series of administrative proceedings e.g. formal approvals, ratification, our advisory board can focus directly on a particular issue and give advice.
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