Now that you have chosen your advisory council members, this article details how to prepare and run the meetings.
How to prepare for a meeting of the council of advisors
Despite superb and continuing success growing a company, many entrepreneurs have no experience preparing for meetings. As a result, many avoid meetings as a general rule.
Thus, one key to successful governance at FCEs (even well established firms with ample management structure) is for an advisor to coach the ownership team on how to prepare for the first council of advisors meeting. Central to this process is preparation of the briefing book for the inaugural meeting of the council.
Entrepreneurs and managers with little governance experience rarely realise that one of the fundamental benefits of advisory council meetings is the discipline such meetings impose on the person conducting the meeting. The discipline of preparing agendas, briefing materials, and even position papers on important topics, often constitute a fundamental and salutary cultural change.
However, any advocate of an advisory council must recognise that mentoring the company on using these basic written tools of corporate governance can be the difference between success and failure of an attempt to begin the development of effective governance.
One final caveat: The purpose of a council of advisors is all business. Family owners should draw clear boundaries between the business' agenda and the family's agenda. Attendance at council of advisors meetings may present family members with a window on how to debate emotionally powerful ideas successfully.
But creating a successful council of advisors marks the arrival point, not the departure point for a family's journey through its relationship and other family issues. Family conflicts acted out in the business must be addressed before the company installs effective governance techniques.
How to conduct an advisory council meeting
As with meeting preparation, few successful entrepreneurs - and even many managers - have little training in running effective meetings. This caveat is especially true when the meetings are not task oriented, but rather essentially policy or strategy discussions.
Here, as in meeting preparation, mentoring from a key advisor, such as legal counsel, can prove indispensable to the successful launch of corporate governance.
Meetings of a board of directors, advisory council or family council are all most effective when purposeful roles are chosen that enhance the process.
We recommend that there be a chairperson of the meeting whose role is to facilitate the agenda items and their discussion. If the chairperson desires to add substantive points to the discussion, he or she should ask another individual to take over the role of facilitator for that time period.
There should be an individual acting as "recorder" whose role is to take notes of the advisory council's discussion of agenda items. The recorder is most effective when using flip charts, so that everyone attending the meeting sees what has been said and all participants are assured that their input has been heard (thus, allowing the chairperson to cut short repetitive remarks). Discussions of key issues without attribution result in a free discussion of ideas and options.
A third role, for at least the initial meeting of the advisory council, is a process observer whose purpose is to keep the meeting on track. The process observer is given permission to actively participate with suggestions solely related to the process (e.g., "We are about to run over the time allotted for this agenda item. Do we wish to continue or to cut off the discussion?").
Between meetings, it is important to avoid making strategic decisions without consulting the advisory council members. If acting on their advice, it is useful for the CEO to update the advisory council in order to show them evidence of their value to the business.
Liability issues for prospective advisory council members
Companies should consult their business counsel for individual state laws that might apply. Additional protection is the adoption of resolutions by the company's board of directors, as outlined above, that delineate the role of advisory council members.
Important housekeeping matters
Because a council of advisors is not a fiduciary body whose members, like members of a board of directors, have duties governed by statute and common law, it is best to utilise contracts to establish their duties. Thus, to ensure confidentiality, advisors should be required to sign non-disclosure and confidentiality agreements.
Advisors will likely learn a great deal about the company's intellectual property, business know-how and customers. This information belongs to the company and it has the duty to insist that anyone not governed by privilege or statutory provisions submit to the discipline of such contracts.
Similarly, given their access to proprietary information and key personnel, they should also execute non-competition and non-solicitation agreements. Any advisor who resists signing such documents does not qualify for service on a council of advisors. Language may be negotiated, but, in this case, the family ownership group - like customers at some retailers - is always right.
Conclusion
Much is written about the need for effective corporate governance. But the secret is less in understanding the utility of governance than in learning how to do it.
Pride, privacy and anxiety about disclosing family secrets often preclude families who control business enterprises from entertaining the idea of governance. But hands-on coaching and practical assistance from advisors familiar with councils of advisors, can unlock the door to enhancing corporate performance through the creation and maintenance of effective governance techniques, such as advisory councils.
Read the article 'Why A Family Controlled Enterprise Should Have Effective Corporate Governance'
Read the article 'How To Create Effective Governance In A Family Controlled Enterprise - Council Of Advisors'