Contributed by Marissa Levin.
You’ve done a thorough job of identifying, screening, and selecting your candidates. You’ve narrowed your pool to those you believe are the right people to get you from where you are now to where you want to be. You’ve decided how you will compensate them. Now it’s time to make it official and start advisor on-boarding.
Start with officially bringing them on board. Then focus on what that will mean to the organization, the shifts that will occur, and the change management strategy you will need so there is minimal disruption and you generate positive changes.
This column will focus on the legal and administrative aspects of integrating your advisory board into your organization. In the next two columns, we’ll look at how to run your first advisory board meeting, and how to ensure a smooth integration of your advisors into your company.
Making if Official – The Offer Package
You need several documents to bring your board members to your team:
- Board member letter of commitment (required)
- Non-disclosure agreement (required)
- Non-compete agreement (optional)
- Board manual (optional)
Board Member Letter of Commitment (Required)
Just as you give prospective employees an offer letter that spells out roles, responsibilities, and compensation and requires their signature of acceptance, you must follow the same process for retaining a board member.
A typical letter of commitment will include:
- A “thank you for joining us” message
- Clearly stated compensation/payment terms for the advisor
- Agreement to the vision, mission, and values of the organization (provide these in the letter)
- Statement of the agreed-upon time commitment
- Agreement to prepare for, attend, and participate in meetings
- Agreement to attend/participate in company-wide events as available
- Agreed upon terms to separate, providing both parties with an opportunity to terminate the relationship
Non-Disclosure Agreement (Required)
The non-disclosure agreement (NDA) is mandatory for anyone in your organization who is privy to confidential information. You should customize it specifically for your advisory board members with precise language that states there will be no disclosure of any information that was discussed while serving on the board of advisors, during or after board service. It is important to include the element of an NDA remaining in place after board service is complete. As we have discussed, not every board relationship ends well, and it is important to protect your company and its information against unforeseen circumstances.
The Board Member Letter of Commitment and the NDA are essential for engaging your advisors.
Sample Board Member Letter of Commitment
I ________________________ agree to serve on the _______________________ board of advisors. As a member of this board, I hereby:
- Commit to act in the best interests of the organization.
- Commit to attend all scheduled board meetings.
- Commit to attend company all-hands meetings.
- Commit to help mentor/coach the members of the management team.
I understand that the board meets once per quarter for four hours, and that there might be additional required meetings at any time. I will do my best to attend if I am necessary.
I understand that the board of advisors is an essential component to the growth of (company name), and that my participation is critical to its success. I therefore understand that if I do not live up to these commitments, I might be removed from the board.
CEO, (company name) Board Member Name
Non-Compete Agreement (Optional)
Non-compete agreements can be contentious. This is why they rarely hold up in a court of law when an employee takes a job with another company and the former employer tries to stop them from accepting employment.
The decision to insist on a non-compete agreement with a board of advisors is a very personal one. By doing so, you could alienate some wonderful board candidates, not only because of who they might be serving now as an advisor, but who they might want to serve in the future. This decision depends heavily on your specific market. If you operate in a field that has many competitors, it will be more difficult to enforce this type of agreement.
If you can identify specific companies that you would want to prohibit them from doing business with, it would be reasonable to include them. However, to insist on exclusion from companies across an entire market sector isn’t usually reasonable.
Of course, there are certain circumstances when a non-compete absolutely makes sense. For example, if your company is patenting a new product, or bringing a new technology or drug to the market, then those trade secrets must be protected.
Again, you must decide for yourself if a non-compete agreement makes sense for your board.
Board Manual (Optional)
This is definitely an optional resource, but it goes a long way in ensuring everyone has the same information.
Items commonly included are:
- Organization’s vision, mission, and values
- Organizational history
- Organization chart
- Current board of advisors list with contact information for advisors and company executives
- Bios for each board member and company executive
- Roles for each board member highlighting specific areas of expertise
- Annual board calendar (the earlier you can gain commitment for meeting dates, the better)
Creating the right advisory board requires the same amount of administrative due diligence that is involved with bringing on new employees. They need to be properly onboarded with the right documentation that spells out expectations, roles and responsibilities.
Addressing these needs as soon as possible will ensure that your advisors can focus on what really matters, which is supporting your leadership team, and getting your company positioned for growth.
Marissa Levin provides transformational CEO & executive coaching and facilitation under the TransformU Growth Program. She focuses on strategy, people, process, infrastructure, and goal-setting.
Finding an advisor has never been easier or more reliable. Visit Cerius Advisors to learn how. Avoid painful lessons learned. Talk to someone who has already been down the road before you.