Rubbish Direct - Advisory Board Case Study

Introduction

Rubbish Direct started in business in 1999 with two owners (Mark and Rodger) each holding 50%. They saw a niche opportunity in the rubbish collection sector that was growing steadily and was dominated by one major provider, whose level of customer service was very poor. By providing a level of service that clients wanted, by 2014 they had grown to 55 staff and 22 collection vehicles.

With the assistance of Simon Telfer from Appoint Better Boards, Rubbish Direct decided that it would set up an Advisory Board with two outside members, the two owners and one senior manager. I took up the position of Chairman and a former colleague of the owners (Peter) joined as a member. Each of our skill sets were totally different so we brought a diversity that was not there previously.
All of us fully understood that Peter and I were not Directors but advisors to the owners. They would decide for themselves whether they would take our advice.

Value Added

The two owners intuitively knew what had to be done to build a successful business. In their case it was to build a team to provide a very high quality of service for 365 days a year.  However with a business that now employs 55+ staff, that intuition on its own was not enough.
The areas where the Advisory Board has provided a lead and added it’s value are:-
  • Monthly board meetings with written reports (2 pages max) from the senior managers plus full financials.
  • Twice annual business planning sessions where matters such as mission, strategies, marketing etc are debated and decided.
  • Action Notes are prepared for all meetings and the board checks that what was “gunna be done” is done.
  • Focussing the two owners into complementary responsibilities and duties with a formal chain of command.
  • Providing coaching and mentoring services on matters of governance and operational management.
  • Introducing simplified and focussed reporting of KPI’s so that the true business drivers are clear to see.
As you would expect in a vibrant and growing business, there is still a lot to be done and the advisory board will have its place to play.

Learnings

Owners of private companies are motivated to set up an Advisory Board to obtain guidance from experienced, independent advisors whose skill set is beyond their own and beyond the traditional advisors such as their accountant or specialist consultants. Often their two major concerns are the loss of control and having to share their private business information (such as financial performance) with outsiders.

Because the owners could decide for themselves whether they took the advice from the Advisory Board members effectively there is no loss of control. On two significant matters the owners did not take our advice and we accepted this as their prerogative. However if this was a frequent occurrence there is a point where the business ought save the costs of an Advisory Board and instead seek specific expert advice only as required. The significant point is that all parties understand this balance.

As regards the sharing of private information, as the relationship grows any concerns evaporate.

If I was to give any advice to those setting up and running an Advisory Board it would be:-
  1. For both parties to define and agree on the scope of the board’s domain and review this on a regular basis as the needs change over time.
  2. For both parties to regularly review and update the relationship. Often this involves contact beyond strictly work.
  3. For the owners to choose members with the right balance of skills and experience and then fully utilise them.  Choose people who will challenge your thinking even though this may cause discomfort.
  4. For the members to recognise that it is a private company and respect the owners sensitivities.
  5. As Chairman, to be available, to be both pro-active and re-active and to be on the continual lookout for matters that need to be dealt with either through the regular meeting or as a mentor to the participants.
Although the principles of governance remain the same for every business, the individual circumstances mean that “one size does not fit all”.

Summary

What value has the advisory board brought to Rubbish Direct? It has strengthened the business by adding “best practice” at both a strategic and operational level, ensuring the owners regularly consider strategic matters and ensuring that what is going to be done “is done”.

As a member , it brings a high level of satisfaction by making a contribution that is important to the on-going success of the business. 
Finally, operating an Advisory Board is almost essential for a business that is facing serious challenges or is wanting to develop beyond its routine.
 
Keith McConnell
July 2014