The exact status or role of an advisory board has been the subject of much debate in organisational circles, particularly in the case of non-profits. The term ‘advisory board’ can be described as a team of persons who provide advice and guidance to an organisation. An advisory board is a collection of individuals who bring unique knowledge and skills, which complement the knowledge and skills of the formal Board members in order to more effectively govern the organization. Advisory boards are sometimes used to maintain formal and visible relationships with people who have particular strong status, for example, people whose terms have expired on the governing Board, leaders in the community and people with highly respected skills in certain program areas. An advisory group (as I prefer to refer to it) is a collection of individuals who bring unique knowledge and skills, which complement the knowledge and skills of the formal board members in order to more effectively govern the organization. They have in some instances been referred to as the ‘Shadow Board’. Advisory groups are sometimes used, too, to provide membership which gives status to people, for example, retired CEOs, board chairs or major contributors.
First, it must be stated that there is no legal frame work or support for an advisory board. It is not provided for under the Companies and Allied Matters Act. The guidance provided by the Advisory Board would at best be of persuasive authority to the company or entity, especially where a formal Board exists. In this instance, in the scheme of the University, the advisory board is not the statutory board, and has no legal or statutory duties or functions. The Advisory Board does not have formal authority to govern the organization, that is, the advisory board cannot issue directives that must be followed as in the case with a governing Board. Rather, the advisory board serves to make recommendations and/or provide key information and materials to the formal Board of Directors.Committees of governing Boards, for example, Fundraising Committees and Personnel Committees, are of the same capacity as Advisory Boards – their members only make recommendations to the full Board.
The statutorily recognised Board of Directors is the body charged with the statutory responsibility of managing the company. It is this body that has received the approval of the regulator, for instance in the case of banks, the Central Bank of Nigeria (on an individual board member basis). It is also this body that is by law, deemed to be the legal trustee of the parent’s assets and monies. The advisory board does not have these attributes. For these reasons, it is important to avoid an overlap in the scope of authority and boundary between the advisory board and the statutory Board. The Board of Directors or its equivalent may feel that its functions and responsibilities are being taken over by an advisory board. Having said that, an effective advisory board properly composed and structured, can provide non-binding but informed guidance and serve as a tremendous ally in the quest for superior corporate governance. It is the advisory board of a non-profit, for instance, can provide tremendous direction for EDC, which direction would be of highly persuasive authority to the legal board and indeed the non-profit.
As a useful guide it is good to define the term or tenure of an advisory group. For ongoing, major activities (lasting longer than 12 months) it valuable to establish a standing advisory group. The tenure can be 3 years, renewable for another term. For short-term activities (lasting one to nine months), an ad hoc advisory group should be established. It is important to carefully define the role of the advisory group, its objectives, duration, guidelines for membership, how it contributes knowledge and skills, and any structures/policies from which the advisory group interacts with the formal board of directors and organization members. The advisory group, like the formal board of directors, should have a chairman who will drive the proceedings and organization and development of the advisory group. He/ she should be the point of contact between the advisory group and the formal board of directors. His appointment should also be tenured (for instance 3 or 4 years).
Although the advisory board is not a statutory board in stricto sensu, they nonetheless serve as the face of the organizations to the public, and are perceived as ambassadors of the organization. The following are recommended as ways of optimizing such a vital asset to the organization.
- a)A Defined Role: The advisory board should be responsible for advising the management of the organization on the importance, ways and means of staying the course/ its flight path to the realization of the organization’s defined objectives. It should be responsible for cautioning against deviations (direct or unintended) as well as capacity issues. In the case of a non-profit organization, it should devise ways of measuring the impact of the organization’s programmes.
- b)Engagement: The involvement of the advisory board may be widely known, for example, through publication on the organization’s website or letterhead, or through their individual communications with others about their role on the organization’s advisory board. Advisory board members should be aware of the organization’s mission, activities, and values. The Chairman and the entire advisory board should be kept informed of the activities of the organization. This should be done by the chief executive officer of the organization or any other Executive Director. This can be via emails, calls, visits, informal meetings, etc. Members could be called upon to assist the organization in a numbers of ways.
- c)A High-Level Connect/ Nexus:The Chairman of the advisory board should have access to the reports of organization and the Chairman of the statutory board, in order to ensure a direct policy understanding of the advisory board, and infuse a sense of seriousness of the role of the Board.
- d)Regular Meetings: The Advisory Board should meet atleast 2 times in any given year; and such meetings should be properly conducted, with adequate notices of meeting, stipulating the agenda and including the pre-meeting reading materials in an Advisory Board Pack. The meetings should not be too long and must be focused.
- e)Tenure: It is recommended that the tenure should be fixed at 3 years. New members should be appointed to replace retiring members.
- f)Feedback: There should be a feedback mechanism between the advisory board members and the chief executive officer of the organization. This could be formal or informal as the case may be.