Once, when working with a family business client, I recommended they hire an experienced CFO.  Since there was no one in the family who fit this bill, the founder said to me:  “You want someone from outside the family to see the books?”  (Never mind they had already shared financials with me.)  Imagine what he said when I suggested they recruit independent, non-family members for a Board of Advisors.

In my last blog I pointed out the roles and benefits of an advisory board.  Here I offer advice on how to choose members for that board.  I counsel clients to break the choice into two criteria: Functional Need and Perspective.

Functional Need

What are the company’s strategic goals and what knowledge base is required towards that end? For example, a company planning rapid expansion should look for board members who are professionals and other owners with similar growth experience.  One owner looking to update his antiquated processes and systems recruited another owner with relevant tech sector experience.

Sometimes creativity is needed to look beyond standard business experience.  In the case of an upcoming generation transition it is sensible to find board members known for their mentoring skills as well as experience where the incoming generation of leaders may be weak.  For one client with internal family division, we recruited another business owner with a counseling background.

Perspective

First, ensure affinity between the perspective board member and the CEO/owner.  When the CEO/owner interviews the perspective board member, is it a two-way conversation with give and take or is it a monologue from either side?   How much time is spent feeding off of each other’s ideas and energy versus explaining what was meant?  It certainly helps if board members have the respect, if not a similar affinity, with other shareholders and key stakeholders.

Second, avoid bringing in a “yes man”.  In the interview, is the perspective board member building on what the CEO/owner said, providing realistic constructive criticism and suggestions or is the candidate just parroting back what the CEO/owner says?  Fresh ideas come from bridging disagreements; not from someone who only knows how to say “You’re right.”

Third, find someone who understands the culture of the business.  For a family business, board members need to understand the unique complexities of a family’s decision making processes.  In another example, if the company is entrepreneurial in nature, find board members who enjoy the excitement while maintain a cool head and steady demeanor when others do not.

The right mix of skills, experience and perspective are essential when selecting your Board of Advisors.  This means finding those with the business and/or technical skills to move the business forward as well as the experience and perspective of having been where you are now and where you see your company headed towards.