Advisory boards seem an obvious way forward for companies run by executives with limited global leadership exposure.
One of the biggest advantages of advisory boards in South Africa is the facilitation of input and advice from wise old heads. In this way, highly respected, vastly experienced managers can make an important contribution to the company and the new South Africa.
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At the same time, younger managers and business school graduates benefit from the sort of knowledge not found on an MBA course.
So, where’s the potential flaw?
The pitfall is found in the grey area between advice and direction or between a general observation and a specific instruction. If an instruction or direction is given, an advisor may be regarded, for legal purposes, as a ‘shadow director’ and that could spell trouble for any advisor who has not taken out insurance to cover the risks run by formal boards of directors in the event of liquidation or fraud.
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