As companies grow and experience some success they start to hit volume levels that require more people and, more importantly, a higher degree of expertise. Typically the expanded roles are usually a higher degree of sophistication in Accounting/Finance, the adding of Human Resource talent, additional Marketing expertise and others. This challenges these organizations to ensure they have the infrastructure to support these expanded roles; and that the additional talent is continuing to give a return to the company in increased revenue and profit.
This infusion of expertise also means they need to be guided differently; these executives are accustomed to a level of inclusive coaching skills, reporting relationships and accountability. This means ownership needs to evolve into a more sophisticated collaborative style of managing! Many owners struggle with transitioning from an environment where they were involved with everything to entrusting decisions to be made by qualified management; while ensuring they have proper reporting controls in place. This also means creating a corporate culture with governance structural changes as well.
Well, good governance is not an inherent skill; it needs coaching in and of itself. How do company owners learn to manage a more sophisticated management team .Well, there are a number of ways; some owners have a high degree of confidence in their ability to rise to the occasion – and some actually do! However, the great majority suffer setbacks in transitioning their management capabilities and these lessons are expensive in lost talent, higher turnover and revenue shortfalls.
It does not have to be this way.
It often takes outside objectivity to get their attention.
As mentioned in a recent article one relatively easy way to facilitate the evolution of a company is through establishing an Advisory Board. It still involves hard work on the part of management but the rewards can be substantial. In a recent study the BDC commissioned they found that from 2001 to 2011the average annual sales of businesses that had advisory boards were 24% higher than those of comparable companies, productivity was 18% higher and in the 3 years following establishing an advisory board sales grew 66.8% vs 22.9% over the previous 3 years – all compelling financial reasons for creating an advisory board. Further, the Advisory Board composition can and should include expertise beyond the capabilities of the owner usually this expertise can include; finance and/or accounting, sales and marketing, human resources and operational expertise. On average a board has five people and while they do not have voting rights nor do they have the accountability of a Board of Directors they can advise effectively and are a meaningful sounding board for the owner.
According to the study, the leaders believed the benefits brought by the advisory board more than compensated for the effort required to set them up and 80% of the Business Leaders would not hesitate to do so again.
Adrian Herschell – Plutus Consulting Group