Dave Berkus

Author, Speaker, Consultant and Investor

www.berkus.com

Dave Berkus has a proven track record in operations, venture investing and corporate board service, both public and private. As an entrepreneur, he has formed, managed and sold successful businesses in the entertainment and software arenas. As a private equity investor, he has obtained healthy returns from liquidity events in over a dozen investments in early-stage ventures. As a corporate mentor and director, he was named “Director of the Year” for his directorship efforts with over 40 companies in the past decade.

Dave currently sits on 10 for-profit boards, six as chairman, and on four non-profit boards.  He has served on numerous advisory boards over the years.

As more companies become disillusioned with their boards of directors, many are turning to creating boards of advisors. Executives claim that the framework of boards of directors is too restrictive because they are locked into corporate and legal contracts to protect the interests of shareholders. Boards of advisors however, are becoming a useful alternative because advisors have more anonymity, and more legal leeway to speak their minds. There are pros and cons to both types of boards. Boards of directors, which are selected by the shareholders, are directly responsible for both strategic and fiduciary decisions. They need to be insured and require financial compensation so are better suited to larger corporations. Although boards of directors do not hold ultimate responsibility, it was noted by A C WebMaster on askville.amazon.com, “They are limited in their authority by those people who chose them for the position.  In business, this would be the shareholders.” Both boards of directors and boards of advisors may exist independently or may work together for the mutual benefit of the company. Providing contrast is essential according to eminutes.com, “The formality, liability and expense of a Board of Directors fuels the popularity of an informal, budget-friendly alternative: a Board of Advisors.” Organizations desperately in need of impartial advice and guidance seek outside help from experts. Advisors can be hand-picked to complement the expertise of top tier leaders within the organization; credibility and networking is important, therefore advisors may be selected based on credentials, contacts or political power. Advisors do not need to be insured or financially compensated and their time commitment is minimal. According to an eHow contributor, Mike Broemmel, “In some instances confusion exists as to the purposes, composition, responsibilities and authority of these two types of boards.” Responsibilities should be clearly defined for boards of advisors and they should be evaluated frequently in order to gain multiple benefits at minimal cost. To turn this trend into an advantage for your company, consider the following. Boards of Advisors may offer more utility than Directors. The right board of advisors is a strategic advantage. Use your board of advisors for uncensored perspective. Do not assume advisors will work for free. Lastly, balance boards of advisors for maximum effect.