How advisers can augment the board

Source: Business Times
Article Date: 09 May 2025
Author: Alvin Chiang

The growth of advisory panels has risen over 20% since 2021, aiding succession planning and providing fresh perspectives.

One of the expected roles of the board of a company is to provide strategic guidance by drawing upon the diverse experience and expertise of its directors. Indeed, much of the discussions around the need for board diversity is precisely in response to this.

There are however, limitations in developing cognitive diversity through just the composition of the board. For one, there is a physical limitation in the number of board seats. Board sizes have to be fit-for-purpose, and the presence of too many members risks a board becoming too unwieldy. How then, can boards look to augment their capabilities without having to add more directors?

Enter the advisory panel

When in doubt, the board is empowered to seek external advice – especially to tackle specific issues that require specialist knowledge. But the use of such advisers is usually triggered by an event or a particular situation, such as in response to a regulatory change or, in more extreme cases, a crisis.

With the increasing complexity of the governance ecosystem, coupled with heightened expectations of directors, the idea of having a standing panel of subject-matter specialists to advise boards is gaining traction in some quarters.

Boards of leading companies across the world are starting to build advisory panels around sustainability, customer experience, technology and innovation, to name a few. According to the Advisory Board Centre’s State of the Market Report for 2025, the use of advisory boards has seen over 20 per cent growth since 2021, mainly across the US and European markets.

Many of these forward-looking boards are also leveraging these advisory panels for succession-planning, as a way to screen and “preview” potential candidates. Having these individuals plugged in early on also has the added advantage of an easier onboarding in the event they are elected to the board.

A wider and fresher lens

One of the key distinctions of an advisory panel vis-a-vis the board of directors lies in the role they play in decision-making. Unlike directors, advisory panel members do not make decisions, but are there to lend their expertise and support the board in making better-informed decisions. They can weigh in on issues that a board is less familiar with, as well as potentially provide the directors with alternative perspectives that may not have been considered. An example of this locally is the board of DBS Bank co-opting a sustainability expert onto its Board Sustainability Committee.

The non-fiduciary nature of advisory panels allows the board to access a wider network of subject matter experts, especially those who are less keen to take on directorship roles. As such, advisers can also act as a conduit for continuous learning in areas where the board and leadership team may find themselves lacking or needing to stay up-to-date on.

Advisory panels can also act as a sounding board and catalyst for fresh and innovative ideas. Healthcare giant Johnson & Johnson, for example, sought expert advice in the intersection of robotic devices and medical procedures. The company subsequently assembled an advisory board comprising practising doctors with expertise in the field as well as robotics experts with experience in the design and development of such devices.

Beware pitfalls

However, an advisory panel does carry some risks when not implemented well. In particular, the lack of commitment from advisers with no real “skin in the game” could lead to diluted performance. This is especially so when expectations – the scope, objectives, purpose and engagement – are not clearly spelt out from the start.

As with the board of directors, the advisory panel should remain distinct from management. The execution and implementation of projects and day-to-day operations in support of the planned direction should not be within the ambit of the advisory panel. The separation of advice and guidance versus that of direction and execution should be clear, as this will maintain the lines of accountability further down the road; especially when things don’t go according to plan.

Setting up for success

Key considerations when establishing an effective board advisory panel are:

What is the raison d’etre of the advisory panel, and what part will it play in supporting the role of board and management?
How long will this panel exist? What are the conditions or circumstances that might change its existence, and the tenure and composition of its members?
Who are the potential advisers that can form this panel, based on the scope and core themes identified? How will the members be remunerated?
Who will have access to the advisory panel, and what will be the panel’s mode of engagement with the business? Will there be mechanisms to manage potential conflicts of interest?
How will the insights and guidance of the advisory panel be disseminated across the organisation?

Deployed properly, advisory panels can serve as strategic assets to boards seeking to augment their performance and enhance effectiveness. And while their presence is nascent in this part of the world, it would be remiss of boards not to consider incorporating advisers more systematically into their organisation’s governance construct, be it through co-opting them into existing board committees or as a stand- alone panel.

The writer is a member of the Nominating and Remuneration Committee Chapter at the Singapore Institute of Directors.