The case for advisory councils
Does your company have one? If you’re not getting quality outside advice and new perspectives on your business from qualified business people, then you’re missing something vital to your business.
It’s lonely at the top. I know because I’ve been there. Shakespeare said it best when he wrote, “Uneasy lies the head that wears the crown.” You’re the boss, so everyone comes to you with their problems. But who do you go to when you have tough decisions to make? Who helps make wearing the crown easier?
You say you’ve been in business for years and have the experience to make the tough calls. Besides, you have a great staff that you can rely on.
I know. I have been in this business for 32 years, and I had a great staff, too. After working with the same people for an extended period of time, “group think” can set in. Your staff knows you and they may think they know what answer you want, so that’s what you’ll get. You can preach to them all day long that you value their judgment and you encourage their independent thinking. Maybe you get it and maybe you don’t, especially in times like these when other jobs are scarce.
I recently spoke to a lumber dealer about a thorny issue. He is in his late 40s with teenaged kids. He bought the business from his father who is in his mid-80s. His siblings are not in the business, but own the real estate. Sound familiar?
I asked him, “Whom do you go to for advice?” He said, “My father, but he is obviously past his prime. My siblings don’t have any interest in the business and don’t know anything about it anyway, and my kids are too young to be of any help. So, I guess, I don’t have anyone to go to.”
I asked if he ever thought of having an advisory council. He said he had but wasn’t sure how to go about forming one. Who would be on it? How many? How often would they meet? What would they do?
If you’ve asked yourself these questions, here are some points to consider.
You don’t want any nonowner employees or nonowner family members.
You don’t want your outside accountant, attorney, banker or financial adviser. They provide you with specialized advice on specific issues. You need broad business advice.
You do want someone with a financial background.
You do want business people, including one in a business related to yours and one in a completely different business.
If you belong to a “share group” in our industry, you might ask a non-competing member.
You might want someone from the industry, but not necessarily from the same distribution channel, and probably not a supplier.
Regarding the size, probably no more than three of four from outside your own business.
You should establish a regular schedule of four meetings a year, timed so the advisory council can review financials for the preceding quarter. All information should be sent to the advisory council at least a week in advance. Notice I use the words “advisory council” and not a board of directors. You’re looking for advice, not a group to overrule your decisions. And besides, there are potential legal liability issues with a board of directors.
What would your advisory council do? That will vary on your needs. Some common issues for each meeting should include financial review; discussion of general economic conditions, technology, insurance, banking and employee issues; overview of next year’s business plan and performance relative to it.
On an as-needed basis, your advisory council could help you decide about major expenditures, expansion, growth initiatives and succession planning. You probably won’t want them involved in purely family issues, unless they are critical to the success of the business. They shouldn’t be asked to referee.
Knowing lumber dealers as I do, I’ll bet you’re now asking: “How much is this going to cost me?”
I’ll start by reminding you of the old saying, “You get what you pay for.” You’re asking pros to give you their professional advice. What do you pay your accountant and lawyer on an hourly basis? Surely your advisory council is worth at least the same or more, since they bring you broader-based advice.
Look at your advisory council as an investment in the future of your business. Try it for a year or two. If it doesn’t meet your needs, disband it. I’m betting you won’t.
Armstrong names Thomas Mangas CFO
Lancaster, Pa.-based Armstrong World Industries announced it has named Thomas Mangas senior VP and CFO, effective Feb. 1.
Mangas most recently served as VP and CFO of the beauty and grooming business of Proctor & Gamble, a $28-billion business.
“We are pleased to have an executive of Tom’s caliber from a world-class company like Procter & Gamble join Armstrong at this exciting time in Armstrong’s history,” said Michael Lockhart, chairman and CEO. “His background and expertise will be important aids to realizing our significant sales growth and margin expansion objectives over the next several years.”
Armstrong World Industries is a leader in design and manufacturing of floors, ceilings and cabinets. The company’s net sales for 2008 were $3.4 billion.
Around the Web: True Value dealer closes in northern Ohio
A 20-year-old hardware store in Avon Lake, Ohio succumbed to the economic slowdown, according to news reports.
Avon Lake True Value Hardware, a Northern Ohio dealer that has been in operation since 1988, closed its doors for good a week ago, according to the Morning Journal. The 8,000-sq.-ft. store, located in a small shopping center, originally opened as an Ace Hardware store before converting over to True Value, the newspaper reported.
Avon Lake, a community of 20,000 people on the shores of Lake Erie, is located 15 miles west of Cleveland. The article cited the slow housing market and competitive pressures from Home Depot and Lowe’s as contributing factors in the store’s demise.