Daily question: How should you measure the performance of an advisory board?

An advisory board is very different to a legal board of directors. Whilst a legal board of directors has to meet certain requirements and standards imposed by legislation, regulation and contemporary practice, an advisory board has no such constraints. An advisory board can be used for almost any purpose by management.

This flexibility of purpose can be both a strength and a weakness in different contexts. In seeking to measure ‘performance’, it’s important to start with a very clear and consistent understanding of what the purpose is.

In reviewing the performance of an advisory board, it’s important to step away from the traditional thinking about collective accountability that is so critical in understanding and measuring the performance of a legal board. An advisory board is a ‘board’ in name only. In practice advisory boards realise their value through the individual talents and expertise of individuals.

As a result, I’d suggest you adopt individual measures based on why individuals of you have been asked to be on the advisory board. Is it to make sales introductions? Is it to keep the CEO accountable on deadlines? Is it to help them build an operating cadence? All advisors should have a specific and individual purpose. If you’re going to track a metric, it should be this, for each individual advisor.

All advisors should have a specific and individual purpose. If you’re going to track a metric, it should be this, for each individual advisor

Everyone is there for a specific reason (and if they’re not, they probably should be terminated). Johan is an expert on sales and helps the company in that area. Jessica is an expert in Chinese OEM manufacturing and advises the company in this area. The primary value is individual, rather than collective.  This means that the primary form of assessment should be on an individual rather than group basis.

It’s a common trap for the purpose of the advisory board to become amorphous over time as business grows and changes. But this morphing of the board to a general purpose strategy sounding board is generally a trap. The right approach is to replace or discontinue advisors if the company no longer needs their specific area of expertise, not to let that individual become a general advisor on other areas (or ‘strategy’ more broadly)¹. Anchoring measurement to a specific area of expertise will help you do this.

Whilst it is challenging, it’s important you remove ego from this discussion. A lot of advisors won’t like being measured on just “number of sales introductions” or similar metric. They’ll claim their value is much broader and hard to quantify. But in almost all cases if you can’t find one specific area where the person is bringing superior value to the company, they’re actually a drag on the organisation. The best advisory boards are those where there’s a culture of brutal honesty around this – every advisor is right for a time and place – and there will be a time when that area of expertise no longer adds sufficient value.

Finally – one big mistake I see a lot is calling someone an advisor when they’re actually an executive coach. There’s nothing wrong with having these relationships – but they’re of a different nature and shouldn’t be included in an advisory board. Far too many people who are actually filling a coach role like to extend their involvement into strategy and other technical areas of the business. This slippage is dangerous but happens very often.

Notes: 

1. This does not imply that you shouldn’t have an advisory relationship focused on strategy. This can and does add substantial value in the right circumstances. The mistake is letting advisors morph beyond their area of expertise into a general purpose strategy advisory role. There are exceptional strategy advisors out there, but you need to search and recruit them specifically for this purpose.

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