This past spring Colmar & Associates along with Murray Consulting conducted its first Annual Management Compensation Study for real estate brokerage companies. While this study did not endeavor to survey broker/owners, CEO’s about their compensation we did inquire as to the use of outside Advisory Boards of Directors. Surprisingly, not one owner responded in the affirmative.

Advisory Boards can provide significant benefit to ownership. Constituted properly with multi-faceted talent they can bring a wealth of experience, knowledge, input and feedback to the owner/CEO on strategic planning, networking, finance and achievement of company goals and objectives. These boards exist in many other industries, sometimes in conjunction with full policy making boards of directors, so why are they so infrequently utilized in the real estate brokerage business? One can only guess but speculation might include some of the following rationalizations:

• Real estate is believed to be so unique that many of us do not consider that others will understand our business.
• Some may be embarrassed at how poorly their performance is that they do not wish to share with others.
• As CEO/owners, many of us have come up through the ranks and frankly, we know what it takes to make our business run and do not need some other group giving us ideas or suggestions.
• Our egos won’t allow it!
• We already attend so many meetings and prepare for so many others that we simply do not want any more.

There are, no doubt, many other rationalizations that we can create. Perhaps though, the single greatest reason we do not generally subscribe to implementing a Board of Advisors is accountability. We barely let some of our senior management know the inside information on how the company is really doing let alone some outside directors.

Branch Managers are accountable to senior management and sales associates are supposed to be accountable to branch managers. Other departments are accountable as well but somewhere in this entrepreneurial business accountability ceases. It’s not that the Advisory Board has full authority but they can and should ask key questions about the achievement of budgets, strategic plans, growth, management, and succession. Involving senior management in this process reinforces even more the issue of accountability.

So where do you find these people? They probably already exist in some informal way through mutual friends and acquaintances. Perhaps your company attorney, CPA or even your banker. If a university or college is nearby why not look to the school of business or other department. You may know a successful business person from your community or through your church or club who could add another dimension. You might tap a fellow colleague from outside your market.

Start small with 4-5 members who bring different talents and backgrounds to the table. Orient them to your business and your plans. Discuss strategies, finances, working relationships, competition, your market and your long range goals. Explain verbally and in writing what you are looking for from them as a group. Don’t be concerned about confidentiality. It will probably not even become an issue.

Ask that they be able to commit a certain amount of time to you and your company (quarterly would be a good start) and provide them with the materials they need in advance of the meetings. You should be able to consult with them in between meetings as well. Payment for services will vary depending on your market but pay what you would expect if you were on their board. Go for talent regardless of where you have to go to get it. A plane ticket is cheap when you get good results. Involve your senior management in the meetings. They will become more responsive to the company and accountable themselves and will respect even more what you are doing to grow the company.

If the Advisory Board falls short of your expectations then work on improving the communications, change the mix of the directors or disband and start over. There really is nothing to loose and everything to gain. It’s a great and rewarding way to grow your company and provide an even clearer direction for your company.