Why Advisory Boards Are Important for Indian Business Corporates?
CS Anthony Fernando
30 Jul 2021
Creating a board with serious purpose is the first prerequisite to formation of a value adding board. As the purpose itself will bring in the right leaders on the board. Having right leaders who bring the skill sets, stature and experience is key to effectiveness. Clearly articulating the levels of engagement and time commitment upfront ensures clarity and creates purposeful engagement of the board.
Advisory Boards in India is one area that is overlooked by most businesses however, if implemented properly can be a game changer. Researches say that businesses with advisory Boards have a significant impact on stakeholders as their trust level in the decision-making process immensely increases. With such positive impacts and better decision-making results, companies must now think of appointing advisory Boards yet, if we specifically witness the Indian scenario, still there is a lack of awareness on the said concept.
What is an Advisory Board?
An Advisory Board is a group of experts who provide an expert advice other Board members and Senior Management on certain important issues. As such advisory Boards do not have any formal accountability towards decisions taken by the Company yet, their role in helping Boards set high governance standards play a very crucial part. It is noteworthy that not only small organizations or start-ups need advisory Board, but many large companies have appointed highly experience and professional advisory Boards for seeking better advice.
An advisory board can serve as a feeder group for board directors. Their formation and its objectives vary across diverse contexts. Companies which have a large complement of family executives can use an experienced advisory board in tackling family related matters, including performance of family executives, their mentoring and tricky issues of succession within the family. They lend objectivity while being empathetic to such decisions. Needless to say that advisory board can be formed for multiple purposes and one of the purposes can be managing the family. Private equity companies globally and in India are frequent users of advisory board format and this is inherent to their leveraging mindset. These boards assist the private equity companies with networking, market expertise to identify target companies. Their members often sit on the boards of investee companies for business review, coaching the management and acting as a debating partner in key decisions. Sometimes a few of the board members and also act as interim managers.
Why should Companies appoint an Advisory Board?
Here are few important viewpoints that can give clarity on why appointment of Advisory Boards is important for companies:
- They provide innovative perspectives
- Their valuable presence brings credibility
- They help in generating stakeholder trust
- Their opinions are logical, independent and unbiased
- Their presence in companies give a feeling of professionalism to stakeholders
- Their advice helps companies get smooth listing on stock exchanges
Therefore, an Advisory Board can ‘an extended leadership team’ if appointed with a purposeful intent.
How Can MMB help you setting up Advisory Boards?
MMB is on a mission to set up effective Boards in India with great Board members. Setting up an advisory board for Companies is one of the topmost priorities that MMB is making due efforts to inculcate in organization types via handholding and mentoring.
In order to have a right composition of leaders and right structuring with right skillsets and expertise, MMB shall guide companies to get the right people on Advisory Board by understanding specific company business as well as future scope of growth.
For more details connect with us on email@example.com.
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