Board of Directors and Advisory Board? Both, please.


Advisory Boards are often used by the company management in the early stages of the business lifecycle, before a professional board is established. They also tend to have their natural place in family-owned businesses where the board primarily consists of family members. However, an Advisory Board can also be useful even when a well-functioning and professional board is established.

Elected board members are supposed to make good decisions for all shareholders. You, as a founder or majority owner, may need strategic sparring where your role and ownership are central. It can be both difficult and in conflict with good corporate governance to bring this up with the company’s board. Then, an Advisory Board can be appropriate. (Read more about principles of good corporate governance for both publicly traded and privately owned businesses here)

Challenging times can also highlight the need for an Advisory Board, with experts who can see new opportunities for the company. It can also be a good tool for the CEO or the board in times of significant shifts and changes.

As long as roles and communication are clearly defined, preferably in a written agreement where the mandate and rules of engagement are clearly stated, having an Advisory Board can be both complementary and value-adding. It also rests on the Advisory Board to ensure that they do not encroach on the Board of Director’s territory. And again, a high degree of openness is an important premise for this to create value.

Read more about Board work: