February 2011

Supply Side

Benefit your firm by establishing an advisory board

By Jon Baird

For over a year now, I have been part of a three-person advisory board of one of CAMESE’s member firms. This experience leads me to believe that many other small- and mid-sized companies could benefit from establishing such boards of their own.

Many Canadian mining supply firms are privately held. Even if they have a board of directors, often it is made up of family members or others that may be missing key aspects of business experience. These companies could especially benefit from the counsel of outsiders.

A well-chosen group of advisors can advantageously complement the management expertise of a company. They can mentor management, advising on finance, human resources, research and development, manufacturing, marketing and other aspects of business.

Often, smaller firms are comfortable in the niche that they have created for themselves and have matured along with their manager/ owners. An advisory board that works closely with a company over a period of time can offer a refreshing re-orientation to firms that have become fixed in their ways, are not growing and/or may be facing succession decisions.

Members of an advisory board can become coaches for employees tackling specific problems that may be new to senior management. They can also act as third parties in mediating disputes and improving employee morale. Employees’ confidence in their firm can be greatly strengthened if they know that there are permanent advisors who care and want to help their company improve.

An effective advisory board needs an empowered, independent chair who has gained the trust of the owner, CEO and other board members. He or she should be remote from the company, i.e. neither a member of management nor a significant shareholder. As well, an advisory board needs to be informed about all aspects of the firm’s business; there must be a high level of trust, transparency and accountability.

To maximize the benefits of having an advisory board, the chair needs to call regular meetings, perhaps monthly, with agendas, minutes and follow-up. Between meetings, board members can assist management and employees in solving specific problems.

Another area where a board can be beneficial is in terms of performance reviews. Many small business owners do not use position descriptions and annual reviews to evaluate employee performance. In such cases, companies are missing out on the opportunity to improve their employees’ and, ultimately, the company’s productivity. An advisory board can help a company implement a performance evaluation process.

The advisory board could also work with management and staff to create a written strategic plan. This is done by examining the firm’s strengths, weaknesses, opportunities and threats, developing the mission, exposing gaps between existing capabilities and goals, and strategizing to fill the gaps.

Once goals have been developed within a strategic plan, members of an advisory board can assist the firm by tracking the progress of the plan. Often such planning goes to waste when management and employees focus on other pressing short-term tasks that take their minds off longer term measures that could be far more rewarding.

Jon Baird
Jon Baird, managing director of CAMESE and the immediate past president of PDAC, is interested in collective approaches to enhancing the Canadian brand in the world of mining.

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