A strategic advisory council (SAC) is becoming an increasingly valuable asset to CEOs. Mandates from boards of directors continue to take up an expanded amount of time and meeting schedules are becoming too short to allow for the time some CEOs require.
The amount of annual time spent on a company by a board member is between 200 and 230 hours. When adding up the steps and time it takes to prepare for a meeting (reading 200 to 500 page board books, outside committee preparation, staying on top of the industry, interaction with management and covering all the SEC mandated items), the two day board meeting hardly allows enough time to effectively address the strategic direction of the company.
A CEO needs more strategic insight and guidance than a sitting board can provide. Asking board members to extend their commitments to a three or four day agenda is often not possible as many directors serve on multiple boards and might view the added time as inconvenient. With these dynamics in place, the window opens to establishing a SAC.
Having a handpicked SAC can provide valuable expertise from senior executives outside the company. SAC members are completely independent, ungoverned by any regulatory agencies and deliver straight feedback about the thoughts and directions the CEO is contemplating. Additionally, the SAC will provide an excellent proving ground for these ideas before they are presented to the board of directors.
The membership of a SAC is usually comprised of trusted friends, sector experts, financial experts and people that have overall business success. SACs meet two to four times a year for a daylong session. The CEO sets the agenda and, much like a board meeting, sends out a bit of information in advance so SAC members can prepare.
The meetings and structure of the SACs, while highly confidential and covered by nondisclosure agreements, are quite informal. The results of SAC meetings are nonbinding, yet the clarity they can create for the CEO is significant.
The first step in establishing an SAC is obtaining expertise across the CEO’s desired disciplines. It also requires a charter, compensation package and organized recruiting program. The charter will spell out the objectives of the SAC and provide for nondisclosure agreement acceptance. The compensation structure can involve a flat fee plus expenses for attending meetings.
Recruiting members is a job best accomplished by a third party. This trusted individual reaches out to the names provided by the CEO and explains the SAC and extends an invitation to join.
Creating a SAC mandates the administrative capacity to organize the off-site meetings that occur at alternating special locations. Much like a board, the SAC will have the same need for the administrator to arrange travel and accommodations. In some cases, the CEO engages a third party to chair the SAC and work with the administrator to insure the sessions are well organized and flow effortlessly for the CEO and the SAC membership. The strategic and tactical support that a SAC can deliver to the CEO is immeasurable and comes with no strings attached.
John Runne is president of BzAdvice and is a seasoned business adviser with more than 30 years of experience in advising Fortune 1000 companies and their CEOs on strategy and corporate planning. Runne’s experience includes engagements with a host of leading public and private companies where he served multiple times as chairman of strategic advisory councils and boards devising and driving corporate strategic objectives.