Congratulations on founding your startup! Now you may be wondering how to hire an advisory board in 2024.
With everything that needs to get done, it may be easy to put assembling an advisory board at the bottom of your organization’s to-do list. This totally understandable–filling advisory board seats is neither a direct income-producing nor a lead-generating activity.
An advisory board is not going to step into your offices and answer emails, take out the trash, and turn out the lights at the end of the evening. However, from an operations perspective, the sooner you establish your advisory board, the better off your business will be.
Why? By having available a committed group of trusted advisors whose wisdom and technical expertise you can tap, you will be able to seek advice and navigate through murky problems, reduce risk, and seize opportunities.
The formation of an advisory board is an important key step in developing your startup’s credibility. The presence of an advisory board signals to potential clients and investors that your organization prioritizes smooth operations and that its leadership is genuinely interested in cultivating growth, profitability, and stability.
Let’s learn what an advisory board is and how a Fractional COO can assist you with hiring your first advisory board in 2024!
Before that, if you need some pre-reading, check out our ultimate guide for the perfect Fractional COO hire.
What an advisory board is and is not
An advisor board is a body that can provide your business with solutions and insights for current challenges and help you anticipate future trends and areas of risk. The recommendations provided by an advisory board are non-legally binding, and advisory board members do not have any legal or fiduciary responsibilities associated with their presence on the board.
The formula for an advisory board is more or less the same, regardless of the industry or the customers you serve. There are essentially three roles that need to be filled:
An independent chair
External advisors
Internal business representatives
Typically, there are two seats allotted for the external advisor roles and the internal business representatives. Together with the independent chair, the total is five people. Therefore, a start up would have to search for three individuals outside of the organization to join the advisory board.
After a preliminary onboarding meeting, an advisory board is typically scheduled to meet at least twice per year. With the exception of internal business representatives serving on the board, advisory board members are not start up employees.
Those board members who are not employed by the start up should be compensated for their time to attend board meetings, and going hourly rates can range from $100-$500 per hour. Alternatively, non-employee start up advisory board members may also be compensated in the forms of shares or even equity depending upon what type of assistance they can provide your organization.
Cultural fit is extremely important. While advisory board members do not work for your company, they should be held to the same high ethical and behavioral standards as any other employee within your organization. Very crucially, the values of an advisory board member should align with your organization. What exactly does this mean? If your startup is developing technology to collect real-time health data of pets, for instance, your board members should have an affinity for animals and care about animal welfare.
Each advisory board member can fill a specific niche. The roles and responsibilities of individual advisory board members, as well as details regarding schedules and initial onboarding of the board, should all be mentioned in sufficient detail in the advisory board’s charter document.
Advisory board members should be made fully aware in writing of the commitment they are about to undertake, including the estimated time per month that they will need to allocate to board business and meetings, the amount and form of their expected remuneration, and the length of their term on the board.
Advisory board members should be given access to all materials requiring their review at least a month in advance of the board meeting. These meetings can occur in person, virtually, or through a hybrid arrangement, depending upon the needs, logistics, and convenience of the parties involved.
An advisory board should not be confused with a board of directors or other governance structure. Depending upon the industry and the nature of the product or service your startup provides, a board of directors or other governance structure may also be required by law in the jurisdiction in which your organization is formed.
Typically speaking, a board of directors is usually required only when a company has gone public. Members of a board of directors are voted in by the company’s shareholders. In contrast to an advisory board, the board of directors has the power to make legally binding decisions about the operations and financial affairs of a company.
How to hire your first advisory board in 2024 and who to hire
Prior experience on an advisory board is always helpful but not necessary so long as the candidate can offer meaningful and relevant contributions to your start up.
Generally speaking, the individuals you would want to serve on your advisory board have to be trustworthy, of good character, and can contribute meaningfully to your organization.
It is important to be very specific about what value add you expect a potential advisory board member to provide. Some of the most common advisory board member archetypes include industry veterans, networkers (particularly to find investors or secure other sources of funding), trusted contacts, and people who bring in a fresh perspective.
In fact, it is not uncommon for business owners to ask people they already know to join their advisory board, and there is absolutely nothing wrong with this approach. However, it is important that the advice that a potential board member provides will (1) provide value to the business and (2) has the potential to provide a new perspective that the founders may not automatically be aware of.
How a Fractional COO can assist in your advisory board formation and member selection process
A Fractional COO’s job is to hold up a mirror to your organization. Advice from an advisory board that is made up of the wrong people, i.e., those lacking specific expertise or who are not assertive enough to freely speak their minds, may not only hinder your organization’s growth but quite possibly damage it.
A Fractional COO can help you determine who the right people are by assessing what your organization is lacking. If you need a comprehensive guide to understanding Fractional COO rates, be sure to sign up to our newsletter (sign up form at the bottom of this page) to get the latest insights on the industry.
Identify areas where specific guidance is needed
Stakeholder mapping and SWOT analyses are two techniques that a Fractional COO can use to guide your organization through to identify areas where expertise is needed.
A comprehensive stakeholder map will help you keep track of who has influence over your start up, both internally and externally to the business, but it will also provide you with links between stakeholders.
If your startup is in a highly regulated industry, such as securities or energy, but there is no one currently within your organization with advocacy or legislative experience, a stakeholder map can create the case for searching for someone with those competencies.
A stakeholder mapping exercise can be taken further ranking stakeholders by influence on the organization and on each other.
A SWOT analysis can provide a picture of your startup’s business landscape in the present day and help forecast future needs. That way, your startup can locate trusted advisors who have the skill sets to capitalize on opportunities, mitigate risks, or both.
Fill in DEI gaps
Let’s say your startup has a dynamite idea with the potential to revolutionize the lives of the poor in a specific community.
Is there anyone in your organization who has had direct, lived experience with the problem your company is working to solve? Do you or your employees have any substantial and enduring social, cultural, or linguistic ties to the people you wish to serve or to a workforce or contractor you may wish to hire? Is there anyone on your team who you know can confidently communicate with that community and understand their concerns inferentially?
In another instance, a start up involved with developing a pharmaceutical therapy for cancer should not contain an advisory board populated with only oncologists and pharmacologists. Scientists and professionals from other fields whose work interests with cancer therapies should also be sought to provide intellectual diversity.
Creating a stellar advisory board is not an exercise in performative diversity. It is about identifying people whose background and lived experience, in combination with their knowledge, skills, and abilities, can contribute meaningfully to the issues being faced by your organization, its customers and any other stakeholders.
A Fractional COO with experience in conducting DEI audits, which can not only assess demographic diversity but also diversity of thought and education, and preparing position descriptions can assist you with your search for diverse candidates who can provide honest, nuanced, and culturally contextualized advice, alerting you ahead of time of potential pitfalls.
Provide independent and impartial vetting
A Fractional COO can also serve as a resource for independent and impartial vetting of prospective advisory board candidates. A cursory search for advisory board positions on LinkedIn will reveal that hundreds of individuals will apply for a single opportunity.
Because they will be exposed to key business information, prospective advisory board members need to be as well-vetted, if not more so, than your day-to-day employees. Reviewing applicants for fit and drawing up a list of finalists is a service that a Fractional COO can perform for you, saving you time, money, and headaches.
Suggest candidates
A seasoned Fractional COO is going to maintain a large network of contacts. Depending upon the nature of your business and the environment in which it operates, it may be difficult to locate an individual with specific talents or background. A Fractional COO can also suggest candidates which may be able to fulfill the needs for a particular advisory board seat when traditional search methods come back empty.
Onboarding new advisory board members
A Fractional COO can lend a hand by helping you craft your advisory board charter, determining the rate of compensation for board members, and assisting with the overall onboarding process. The onboarding process typically consists of a half-day or full day preliminary meeting with all the members present to discuss the opportunities and challenges faced by the business and where advisory board members’ expertise can specifically be put to use.
Just as in a normal operations context, a Fractional COO can also help you set the tone for communications and suggest ways for board members to efficiently and effectively communicate with one another.
If you yourself have never been an advisory board member yourself, a Fractional COO can take the stress away from these processes and ensure that they are conducted professionally.
Bhuva’s Impact Global: Strategic Board Leadership for High-Growth Tech Startups
As your tech startup reaches the $1 billion USD in annual recurring revenue (ARR) milestone, 2024 is the year to solidify an advisory board that can provide the strategic guidance necessary to achieve your business objectives. A well-constructed board will not only help you navigate the complexities of risk management and operational challenges but also catalyze growth in the competitive climate tech sector.
Having the right board leadership is crucial at this stage, and Bhuva Shakti offers unparalleled expertise in assembling and guiding high-impact advisory boards. With a deep understanding of the unique challenges faced by billion-dollar tech companies, Bhuva can provide the strategic oversight needed to identify risks, drive innovation, and ensure sustainable growth.
Why navigate these challenges alone when you can leverage Bhuva’s extensive experience to get it right from the start? As a seasoned board director, Bhuva’s Impact Global is positioned to offer you comprehensive support, from assembling your advisory board to providing ongoing strategic direction.
Take the stress out of building your advisory board. Connect with Bhuva and her team today to elevate your company’s strategic direction and secure its future in the rapidly evolving tech landscape. Join the ranks of leading tech companies that have thrived under her guidance and explore how her board membership can propel your organization to new heights.
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