Advisory boards: No power, but ideas ‘to chew on’

By Jim Kendall

This column originally appeared in the November 23, 2015 Daily Herald

                Conceptually, advisory boards are a slam dunk: The Small Business Encyclopedia at defines an advisory board as “an informal group of local business professionals who can help you run your business better.”

Seems simple. You ask local professionals you respect to serve on your business’ advisory board, to offer their opinions on company issues you bring them. There’s typically no remuneration, other than a company-provided dinner. Meetings tend to be quarterly, but some advisory boards meet monthly, especially at the beginning.

There is a potential hitch, however: When it comes to corporate decision-making, advisory boards have no authority; members offer insights and advice, but it is the board of directors that sets policy and oversees management.

That hitch helped scuttle the advisory board at CMI Novacast Inc., a Des Plaines firm that produces electromagnetic pumps and flow meters, primarily for liquid metal.

“The reason we began with an advisory board is that we knew the board’s advice would be helpful,” says Mary Gouwens, CFO. “And the board gave us wonderful direction.”

The problem, she continues, is that “We didn’t follow their direction.”

“We wanted different sets of eyes to look at our business,” says Lee Gouwens, president and Mary’s husband. “We wanted (board members) to give us some ideas from outside. They all knew the firm. We felt we could talk honestly with them and get honesty in return.”

The advisory board, which had pretty much met monthly, hasn’t met for six months.

The positive twist in this tale is that the advisory board may well return – although probably a different incarnation and definitely in a different corporate structure – thanks to what appears to have been some introspective thinking by Lee and Mary Gouwens.

The two already have made some structural changes.

“I don’t know beans about running a business,” Lee Gouwens says. “I don’t have the business acumen to run this company. I’m too busy to grow the company.”

That’s a rare admission from a small business owner – but an important one, because it encapsulates the Gouwenses’ need for outside input.

“The advisory board couldn’t hammer us,” says Mary. “The advisory board had no teeth,” adds Lee. “We want someone else to carry the big stick.

“We’re not corporate people.”

What’s changed so far is installation of a new board of directors. The board, Mary says, had been “Lee’s parent (Paul, who in 1972 created predecessor company Cast Metals International, with Lee), Lee and I.” Lee and Mary are on the new board, but three outsiders make up the majority.

What’s ahead is perhaps even more interesting. A search for a new CEO is beginning, though a job description has yet to be written. And the advisory board concept remains alive. “Our intention is to follow both paths – to have advisory board input for the directors to chew on,” Lee says.


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