About the GPEKS Advisory Board

Rationale for the GPEKS advisory board

The main reason an advisory board was created was to to seek expertise outside of the company. Advisory board members provide the company with knowledge, understanding and strategic thinking of the industry or management of the company. When forming its advisory board, GPEKS management seeked board members whose qualities complement the existing board of directors and did not mask gaps in knowledge or skill in the main board.

Our advisory board strengthens the existing board, but does not interfere with authorities of the existing board. The former editor of The Economist, also an advisory board member, once said, “They (advisory boards) are there to give focus to or sometimes challenge research and intelligence work being done in the company, thus avoiding groupthink and giving direction on big picture issues.”.

Advisory board members serve GPEKS for a range of reasons, from personal loyalty to possible indirect or future direct compensation. They benefit in various ways. This is a networking opportunity with other subject matter experts who may be able to contribute to their success. Membership in this board also provides strong 'branding by association'.

Benefits to GPEKS

The benefits of having the advisory board over board of directors include the following:

1. Distance control: Multinational companies have local companies running their business in a particular foreign jurisdiction for lower costs e.g. tax, price of raw materials, and organizational benefits. However, giving authority to an outside group of directors in the local company increases risks and instability of the multinational corporation. Since an advisory board can operate in a different location, with different cultural and business norms, in a different language, as a multinational companies, GPEKS chose to have an advisory board instead of a localized board of directors in order to avoid loss of control.
2. Accountability: The advisory board helps provide accountability to keep you on track with your overall business goals. Knowing that GPEKS management will be expected to report on its progress at the next meeting creates the positive peer pressure needed to achieve more.
3. Preparation for board of directors:  The development of an effective board of directors requires a group of individuals with good chemistry and has the combination of appropriate skills to propel the business. Having an advisory board allows GPEKS to assess the commitments and capabilities of each individual and observe the chemistry between them before appointing them to its board of directors.
4. Higher efficiency: A large board of directors may grow to an unmanageable size where organizational complexity and communication breakdown may occur, leading to ineffective and inefficient function of the board. A smaller advisory board, without the complexity of authority involved in board of directors, works more effectively compared to a board of directors that grows in size as the corporation grows.
5. Formal advice: The complexity and speed of enterprises often make it difficult to seek advice on any particular topic. Enterprises may also find building trust in any person or group to provide on-going and meaningful guidance difficult. The advisory board provides the degree of consistency, longevity and background knowledge as advisory board members provide reliable advice on particular issues.
6. Advisory board members can receive compensation for committing to their positions. This gives incentives to the advisory board members to provide quality advice and ensure that a request for assistance is taken formally.
7. Less pressure on executives: Executives can express partially defined or tentative view to an advisory board since advisory board's sole purpose is to provide advice. This allows them to “test-drive options” before they face the board of directors which demands definitive and assertive business decisions. The board of directors assesses the CEO and establishes his or her compensation. While the advisory board may induce change in GPEKS for the benefits of the company, the board of directors inducing change in the company could suggest a lack of confidence in the senior management team. This imposes great pressure on senior executives and could become a barrier for senior executives to express their issues and seek advice from the board. Thus, the advisory board is a ‘safe harbor’ for senior executives to seek advice and test business options. Directoral Input Directors and Assistant Directors are still required to bring any changes to policy or financial matters to the board for direction. No directors or assistant directors are to make any changes without board approval.
8. Focused input: GPEKS may need advice on a particular aspect of its business (such as marketing, product direction, customer service or contact network expansion). While board of directors need to take into account of all aspects and go through a series of administrative proceedings e.g. formal approvals, ratification, an advisory board can focus directly on a particular issue and give advice.

Function of the board

This advisory board offers assistance to GPEKS with anything from marketing to managing human resources to influencing the direction of regulators. The advisory boards is composed of accomplished experts offering innovative advice and dynamic perspectives. Meeting quarterly or biannually, the board members provide strategic direction, guide quality improvement, and assess program effectiveness. The board provides access to high-quality advice and network in the industry. The Advisory board, as an external group, also provides non-biased information and advice.

Roles and responsibilities of advisory board members developing an understanding of the business, market and industry trends provide “wise counsel” on issues raised by owners/directors or management provide unbiased insights and ideas from a third point-of-view (not involved in the operation of the business) encourage and support the exploration of new business ideas act as a resource for executives provide social networking platform for directors and the company encourage the development of a governance framework that enable sustainable growth of the company monitor business performance impose challenges to directors and management that could improve the business

Creation and operatiom of the advisory board

The management asked itself a few questions when it created its advisory board. The first questions were who is trying to achieve what from an advisory board. The second question was how the business of the board should be conducted. The following issues where addressed.

• Who: The type of advisory board members was determined by the nature of what was sought and expected from them by the enterprise. Advisory board members have distinctive knowledge on different aspects of business such as marketing, product development, sales techniques that are of use to the directors. A lack of definition in “what is sought from the advisory board” or “what sort of advice is to be sought of” would have led to a disorganized board, which eventually could lead to an advisory board that would have provided less value per dollar or hour invested than a well-mandated one. Eventually, it could have resulted in a waste of resources and time for GPEKS and our advisory board members.
• What : The advisory board determines the focus of each committee, whether it is a broad focus or a narrow one on a specific product feature. Individuals in the advisory board share a common goal or similar interests.
• How many: The size of our advisory board was influenced by the efficiency of delivering ongoing information and effectiveness of organizing board meetings. A larger advisory board may have resulted in managerial issues. Therefore, the GPEKS advisory board began with an advisory board leader, and grew from a fairly small size to its ultimate number. Group dynamics suggest the maximum size for an advisory board is eight members, which takes into account of the need for enterprise people and other facilitators at meetings. Some advisory board's mandate may require more significant representation of a specific and large number of constituencies.
• How/When : Meeting organization and frequency - The functioning of the advisory board is affected significantly by how effectively the group's activities are organized and directed. Fixed meeting are scheduled to be held regularly (quarterly or semi-annually based on the commitee) and advisory board members are well informed of the purpose and background information of each meeting in order for them to provide valuable advice. A corollary meeting is provided to advisory board members, which GPEKS management thrives to make of appropriate length, with organized, comprehensible and informative. While concise, it provides enough details to provide advisory board members a suitable foundation for them to advise on the business.

  Confidentiality of the information discussed in the meeting is assumed. A skilled facilitator, administrator or corporate secretary is designated to organize schedules of advisory board meetings and meeting materials. The facilitator of the board is committed and aware of time management for the meeting. The meetings agenda improves the organization and time management for the meeting.

• When: Term of membership Advisory board members are appointed to a default 2 year terms (but which can be agreed with each member to be more or less) so that it ensures them to actively commit to the company and prevent them to get too comfortable with their positions. Term of membership is also important when it comes to expansion of the board; term of membership ensures that the size of the advisory board remains efficient and manageable.