A Board of Advisors is a group composed of business professionals that provides advice on

how a business owner can better manage their company. Because of the informal nature of
this type of board, it can be structured in a way that the owner deems necessary and most
helpful to the company. Advisors typically receive stock-based compensation, such as
options, and benefit from an increased valuation of the business.

The bigger a business entity gets, the more attention it needs, and the more issues arise that
need to be handled precisely and accurately to ensure its continued growth. As a result, the
need for a Board of Advisors becomes stronger for various reasons.

i) Business Development
The pressure to grow a company increases as it gets bigger, and getting more minds working
on it is definitely an advantage. Creating a Board of Advisors helps achieve feedback from
end-users of the company’s products and services and introduces the company to possible
end-users and clients.

For example, a company that manufactures disposable utensils can hire a board member who
used to be a Vice President of a multinational fast-food chain. This is helpful because the
board member may even be able to introduce the company to their former CEO and perhaps
help close a deal.

ii) A Good Backup System

Creating a Board of Advisors that includes names that are popular in their respective
industries can be beneficial. It attracts the attention of investors and creates a feeling of
confidence because such a known individual puts their trust in the company.

Companies that Have Board of Advisors

1. Flipkart
Flipkart has an advisory board with members possessing specific skills in areas like
leadership strategy, technology, and operations. This structure is deemed more flexible
compared to a formal board of directors. For an online retail company like Flipkart, which
focuses on profitability, specialists who can help devise strategies towards this goal are
valuable.1

2. Mahindra
Mahindra has a Tech Mahindra Cloud Advisory Board comprising 50 CXOs across three
chapters: USA, EMEA, and APJI. These advisors are C-suite level cloud heads from various
industry verticals, including manufacturing, telecommunication, retail, logistics, banking, and
healthcare. The board meets in person annually and virtually quarterly to provide insights into
clients' needs and emerging opportunities in cloud technology.

3. Accor Group of Hotels

Accor has an advisory board named ‘Masters of Travel Advisory Board.’ This board includes
industry leaders from technology, law, energy, engineering, and pharmaceuticals. They aim to
create a vision for business travel and corporate meetings post-pandemic, considering

1
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environmental, social, and governance (ESG) demands and business priorities for 2024 and
beyond.

4. Razorpay
Razorpay established an Advisory Board with thought leaders and industry veterans to
emphasize customer-centricity and good governance. The founding members include:
- N. S. Vishwanathan – Former Deputy Governor, Reserve Bank of India (Chairperson)
- Arijit Basu – Chairman, HDB Financial Services & Former MD, State Bank of India
(Member)
- Aruna Sundararajan – IAS (Retd.) & Former Secretary, Ministries of Steel, IT & Telecom,
GoI (Member)
- K. P. Krishnan – IAS (Retd.) & Former Secretary, Ministry of Skill Development and
Entrepreneurship (Member)

The Advisory Board aims to establish high standards in customer experience, corporate
governance, and risk and compliance in the Indian fintech industry. They will periodically
convene to review, analyze, and provide recommendations on strategic and tactical levels.

Rules and Responsibilities of the Board of Advisors

The purpose of most advisory boards is to help an organization gain new insights and advice
to solve business problems or explore new opportunities by stimulating robust, high-quality
conversations. The role of an advisory board is not to make decisions, but rather to provide
current knowledge, critical thinking and analysis to increase the confidence of the
decision-makers who represent the company. An advisory board is different to a governance
board or board of directors.

Due to the flexible nature of advisory boards, the scope, or ‘terms of reference’, and advisor
roles are chosen to fit the business requirements. The specific roles, responsibilities and
expectations are normally established within the advisory board Charter, alongside protocols
within the advisory board structure.

There are typically three key roles within an advisory board structure: a Chair, external
advisors, and either internal directors, stakeholders, or organizational representatives.

For scaling businesses and emerging corporates, the most common structure is one
independent Chair, two external advisors and two internal business representatives (generally
the business owner, director and/or CEO). This structure provides a balance of facilitation,
external advice and follow-through for implementation.

In considering the roles and responsibilities of a board of advisors, board members must
consider what advisory board members do as well as what they are not allowed to do.
Advisory board members typically perform the following functions:

● Be available to serve as consultants

● Educate board members in their areas of expertise
● Attend advisory board meetings
● Introduce people within their networks to the organization
● Speak highly about the nonprofit in public arenas
● Give a donation

On the other hand, advisory board members are not allowed to:

● Govern the nonprofit

● Make financial or other decisions
● Create policies
● Vote
- Benefits of Advisory Boards

Advisory boards can be beneficial for startup nonprofits that have fewer resources.

Unlike board directors with fiduciary duties, advisory board members don’t have any
liability, allowing them to freely give guidance and advice to the board. The board can take or
discard their advice as they see fit.

Advice from an advisory board tends to be more specific to new changes that are occurring
and affecting operations. There tends to be a freer flow of information and discussion during
an advisory board meeting than a board of directors meeting with a strict agenda.

Having an advisory board listed on an organization’s website and letterhead can also boost an
organization’s reputation and credibility with clients or donors.

People who have the caliber to serve on an advisory board will also help expand an
organization’s networking contacts.

Boards can expand or decrease the size of their advisory boards as they see fit. Advisory
board members can be recruited only to serve as needed and can be easily replaced.

When selecting people to serve on a board of advisors, the board should trust the individual’s
skill, level of industry knowledge and awareness of the company’s needs. It’s also essential
for advisory board members to be interested in the organization and motivated to help it
succeed.

Boards should pass over candidates who are apt to give in to groupthink or only offer the
advice they believe will be received well by the board. Advisory board members need to be
individual thinkers who also have enough time to do research before advisory board meetings
and be able to deliver objective, accurate information.
Key Terms of the Contract for a Board of Advisors

When engaging a Board of Advisors, key terms of the contract may include:
- Compensation - Typically stock options or other equity-based incentives.
- Term Length- Duration of the advisory role, often ranging from one to three years.
- Meetings - Frequency and format of meetings (e.g., quarterly virtual meetings, annual
in-person meetings).
- Responsibilities - Specific areas of focus, such as strategic planning, risk management, or
technology innovation.
- Confidentiality Obligations to maintain the confidentiality of company information.
- Non-compete Clause- Restrictions on advising competitors during and after the term of the
advisory role.

By structuring a Board of Advisors with clear responsibilities and strategic goals, companies
can benefit from expert guidance and enhanced credibility in their industry.