Effective Advisory Committee

In the early stages of development, the organization tends to engage more or less organically with stakeholder groups. It’s not uncommon for representatives from such groups to occupy voting seats on the governing board of early-stage businesses. At the growth stage, investors often call for changes to the composition of boards, and In some cases, this may mean stakeholders lose their board positions to be replaced with “independent” directors approved by the investors. This process can contribute to a loss of what was once a natural connection between the organization and its stakeholders, and it can contribute to an erosion of mission focus at the board level of an organization.

Social entrepreneurships can counteract the harmful effects of this change by establishing an advisory committee or advisory board that includes stakeholders. Non-profit organizations frequently use this approach to involve beneficiary groups, clients and other stakeholders in strategy formation without giving them voting positions on the governing board. An advisory committee can help the organization gather information, keep in touch with impacts, and test stakeholder views while avoiding the trap of creating a board that’s too big or one whose members lack strategic skills.Advisory boards can also offer a way to tap into specialist expertise that may be missing from the main board group.

Advisory bodies convened temporarily around a specific project or issue can feed findings back to the larger board and help shape strategic decisions . Angel investors who don’t insist on a voting seat on the board may contribute insight and strategic expertise through participation an advisory committee. To work effectively, advisory bodies need to form part of the overall governance strategy established at the highest board level. This means that they must be formally set, provided with a chair and a written brief, as well as criteria and processes for recruiting appropriate stakeholders. Safeguards need to be put in place to ensure the independence and accountability of the advisory board with clear systems for accountably feeding advisory board views back into the strategic deliberations of the main board group.