Posts Tagged ‘compensation’

Advisory Boards – 4 Tips For Success

Tuesday, October 29th, 2013

As the business owner, who can you turn to for advice?4 tips to help set up Advisory Boards successfully

It can’t be someone who works for you. Your spouse or other family members may not be willing, or able, to help.

It could be a peer – but they may have challenges of their own. And who wants to hire a consultant?

So, what’s left?

There is one resource I haven’t mentioned. It’s commonly linked with start-ups, but I find it can be very useful when companies plateau.

It’s an Advisory Board.

Unlike Boards of Directors, Advisory Boards aren’t for life. You can keep them running for as long as you want – or need.

Here are some tips for setting one up.

1.  Membership. Based on our experience helping set up Advisory Boards, I’d suggest recruiting no more than 5 or 6 members.

Find people who complement your skills and experience. Invite someone who has already grown her or his business to the size you’re aiming for. Consider also asking your accountant; someone (e.g. from an industry association) who knows your markets; a supplier of non-competitive products to your customers; and even your banker.

Make a list, identify the person the others will want to work with and approach him or her first.

2.  Compensation. You may be surprised to find that most people are flattered to be asked to join an Advisory Board.

That doesn’t mean you should expect them to do it for free. But you don’t have to offer excessive compensation either.

Remember they will incur costs to get to meetings and they will be giving up another activity to be there. Recognize that by offering them a couple of hundred dollars and a decent breakfast, lunch or dinner at each meeting.

3.  Set goals and expectations. Meet once a quarter, for no more than 2 or 3 hours. Explain that you may also want to talk to them individually between meetings if an issue arises specific to their expertise.

Publish the agenda and circulate any reading materials the week before the meeting. Appoint someone who is good at keeping meetings on track and on time to run them. Once a year, ask the members what they think of the meetings and make changes based on that input.

Make it clear that you want them to provide valuable advice but that you’ll make the final decisions. They hold no legal or financial responsibility for those decisions.

4.  Build (or strengthen) your relationships with board members. If you’ve chosen well, your members can connect you to people in their networks (including potential customers).

But they can also introduce to, for example, new software or technologies and make you aware of grants or programs that provide funding.

You can read more about Advisory Boards here and here. Ignore the references to start-ups; it’s good advice for everyone!

 

If you enjoyed this post you’ll also enjoy I’m Not Alone…….

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Let’s Hold Consultants Accountable For Results

Tuesday, September 24th, 2013

For a Scotsman, true accountability occurs when results are linked to compensation.Let's hold consultants responsible for results

So I’ve tried various ways of linking our payment to our performance for most of the 12 years that I’ve owned ProfitPATH.

Why? In addition to the one above, there are 2 other reasons.

First, the people we work with are all taking risks. If we are to be credible, why should we be risk exempt?

Second, when I worked in corporations I hated paying consultants before I knew if their recommendations would deliver the results I wanted. When I started ProfitPATH I swore we wouldn’t do that.

It’s relatively easy to link our fees to our own performance.

We make sure the deliverables are clear and give the business owner what they want. We also tell our clients that they can stop an assignment at any time without any financial penalty. Just pay us our fees up to that point.

Linking payment to our clients’ results is a little more complicated.

Why?

Because of the number of things we have no direct control over. They include, for example, everything from the economy (be honest, did you guess the last crash would come when it did) to how they arrive at the profit line on their income statement.

But just because it’s complicated, that doesn’t mean we shouldn’t try.

And so we’ve experimented with a number of things. Like deferring a portion of our fees until the outcome of our recommendation becomes clear; or linking part of our payment to the achievement of a result.

There are other ways to hold consultants accountable.

A client can, for example, refuse to act as a reference; or communicate their disappointment as widely as possible; or withhold part, or all, of the fees. But these are all post completion options.

Other alternatives, that we recommend, are frequent, regular progress reviews. When coupled with the “terminate at any time with no penalty” policy I mentioned above, these reviews carry some weight.

Holding us accountable is part of my wider belief that the management consulting industry needs to take some of its own advice. It has to change its business model.

Now Clay Christensen, author of “The Innovators Dilemma” and one of the leading thinkers about innovation, has weighed in. A Harvard academic, and former consultant with the Boston Consulting Group, he believes that the consulting industry is ripe for disruption.

He’s joined by Ron Ashkenas, managing partner of a consulting firm and academic at Berkley, whose article first set me off on this rant.

I’ve been convinced for years that change needs to happen. It’s encouraging to see thinkers of their caliber saying similar things.

 

If you enjoyed this post you’ll also enjoy Why You Need A Consultant With Hands-On Experience

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