The responsibility of a board of directors is to make sure the company is being steered in the proper direction. Sometimes it’s hard to tell whether or not that’s what’s happening though, particularly if the board is dealing with uncharted waters that members simply don’t have the necessary experience or knowledge to sail. When that happens it’s always a good idea for a board to contact consultants in order to help make decisions and to provide insight that would otherwise be lacking.
What is board consulting?
Board consulting is, quite simply, when the board of directors hires on a consulting service to provide guidance so they can make proper decisions. For example, if a business is contemplating expanding its reach into a new market it is often a good idea to hire consultants who are experts on what it takes to succeed in that market. Other options, such as legal consultants who can say whether a company is capable of meeting all their obligations, are also possible. Many boards even hire consultants to help evaluate the performance of CEOs and to assist in making decisions for new board members to be promoted. If there is a field where one can be considered an expert, then it’s possible for a board to consult them if those needs arise.
Providing the Information to Make Good Decisions
While a board might hire a consultant, or even a firm of consultants, to provide insight and information, the board is not bound to take recommendations and turn them into the plan of action for the business. However, the flip side of that argument is that if someone is going to invest money in hiring an expert or a team of experts to provide all of the best information that can be had, why ignore that advice?
When hiring on a consultant or a firm it’s important for the board to lay out what they want, and what they need to know. Giving consultants a firm direction will help them narrow their focuses and target their reports for what the client wants. For instance, if a real estate company is considering moving into banking for home loans then it might want to know what the potential markets are in a given geographic area. The board doesn’t want to know what legalities it has to follow through on, and it isn’t interested in those looking for payday loans or savings accounts; it just wants to know what the market in a given area is for home buyers and home loans.
It’s also important to remember that even the best consultants with the most impressive track records are not infallible. Markets shift, laws change, and cultural currents might render something that was a rising star into a historical footnote. Just because a board has great consultants on hand is no guarantee that their decisions will turn out right. On the other hand, solid information improves decision making and business acumen dramatically.
Author bio. : XCEO offers need-based board consulting services for corporates to step up their level of performance with regards to board succession planning and overall corporate governance.
