What’s an Advisory Board and Should We have One?
The majority of private companies do not have a formal a Board of Directors. Many companies, including Team 1 Plastics, a plastic injection molding company for the automotive industry, are choosing to have an Advisory Board to provide insight, advice, and guidance to management and owners.
“Businesses of all sizes can benefit from developing their own team of external advisors. A board of advisors is particularly useful in start-up and small companies, providing fresh ideas and unique perspectives to a growing organization,” according to eminutes.com in its article, “Advantages of a Board of Advisors vs. a Board of Directors.”
As President and co-owner of the small company, Team 1 Plastics, Craig Carrel recalled how Team 1’s Advisory Board was begun. “It was started in August 1998 as a way for Team 1’s three owners to meet on a quarterly basis with a group of outside advisors to review the company’s financial reports and to plan for the future.” At the time, Team 1 Plastics was operating two plants – one in Michigan, run by Carrel and co-owner, Gary Grigowski, – and the other in North Carolina, run by [then] co-owner, Jim Capo. “We had started our North Carolina operations on a shoestring, and both plants were struggling with growing pains and profitability issues.” Carrel said that because of the company’s challenges during that time period, the focus of the Advisory Board was on “day-to-day operations and very current events at Team 1.”
Team 1’s Advisory Board has evolved over the years. The original members were Tom Feldpausch, President of Felpausch Grocery Stores, Terry DeWeerd, CFO of Decker Manufacturing, Dale Reichhart, Former President of Huron Plastics and Brad Virkus, Plante & Moran (Team 1’s accounting firm).
Carrel said that in 2010, the decision was made to “retire” the original board members and to “find people from different business disciplines to help us plan our future.”
“Advisors from different disciplines,” eminutes.com pointed out, “can complement the strengths and expertise of the organization’s in-house leaders and provide broader management knowledge.”
Team 1’s current Advisory Board members are Mike Hayes, President of HN Hayes & Company (background in manufacturing sales), Darrel Reece, Former President of Android Industries (background in plant/operations management), Kevin Belew, President of Battersea Partners (background in finance and real estate), Glenn Stevens, executive director MICHAuto (automotive and mobility industries expert), Brad Virkus, Plante & Moran (accounting) and Alan Rothenbuecher, partner in Benesch, Friedlander, Coplan & Arnoff, LLP (legal background with plastics focus). Carrel said that with this new make-up of the Advisory Board, “we have spent the majority of our board time on strategic planning and owner succession issues. They are helping us develop our ownership succession plan that will allow Team 1 Plastics to continue to be a strong and vibrant company after we retire.”
Mike Hayes was one of the individuals who joined Team 1 Plastics’ Advisory Board in 2010. He said that he joined “at a time when Team 1 was entering a strategic growth period.” Utilizing his expertise in manufacturing sales, Hayes’ goal was “to help identify a new sales staff and to see an overall improvement in market access and growth.” Hayes said the hiring of Dave Biondo, Team 1’s Sales Development Manager, was a direct result of his efforts on the Board.
Darrel Reece also joined Team 1’s Advisory Board in 2010. “I was asked to join Team 1’s Advisory Board because, like Craig and Gary, I was an active owner / manager with full profit responsibility for a privately held automotive supplier.” Reece said that his practical knowledge and experience as an owner of an automotive supplier has enabled him to share actual “been there / done that” learning experiences to which Carrel and Grigowski have been able to relate. His input has covered many topics, including “including employee relations, inventory management, scheduling methodology, and standardized work and operating methods.”
Before joining the Advisory Board four years ago, Kevin Belew had been friends with Carrel for many years. He said that “over the years, we’ve realized that we share a common view of the world, life, and business – but from very different perspectives. When Craig and Gary asked me to be on the Board, I didn’t really know what to expect, but I was eager to help in whatever way I could.” Using his background in finance and real estate, Belew said that he tries to contribute to those areas when needed. He added, “I’m also more of a top down thinker while some of the other Board members are bottom up thinkers. Of course, both are needed.”
The veteran of the group is Brad Virkus who has served since the inception of the Advisory Board in 1998. He said that his approach is to try “to know Craig and Gary and to have their best interests at heart. I try to understand their personalities, goals, strengths, and any weaknesses.” He said that he takes this insight and combines it with his knowledge of Team 1 Plastics to help the owners reach their personal and professional goals. “I hope that my interest in knowing them as friends and clients, and being their advocate, leads me to bring ideas and solutions that are in their best interests and the best interests of Team 1 and helps them reach their goals.”
As the newest member of the Board, having joined in February 2017, Alan Rothenbuecher has counseled many plastics companies “on the numerous legal challenges they face, ranging from monetizing intellectual property, retaining human capital, and addressing customer contract issues.” Rothenbuecher said that as an Advisory Board member, he hopes to pass on his “industry knowledge on how to successfully overcome legal issues.”
With his newcomer’s eyes, Rothenbuecher was able to provide a fresh analysis of how Team 1 Plastics’ Advisory Board works. He said that it is a “very interactive board where everyone feels free to speak and offer advice.” He liked that “how the board challenged the owners on pricing and expansion plans.”
Just like Team 1 Plastics’ Advisory Board has evolved over the years, Team 1 Plastics and its owners have also evolved. “What I have seen about Craig, Gary, and Team 1 is that they embrace change and have become experts at change over the years. In many ways, if the company did not have this unique attribute, they would have been forced to close their business, like so many of their competitors,” said Virkus. “In the last 20 years, the world has changed. We have had several financial downturns and unique challenges, including one of the most severe financial recessions in our lifetimes. Automation has been a tremendous driver of change, and the world’s manufacturing base has continued to evolve geographically. Team 1 has met every challenge that change has provided and used it as an opportunity to excel.”
During his years serving on the Advisory Board, Hayes said that he has seen positive changes at Team 1 Plastics. “The company has stabilized and enhanced several department areas. Team 1 now runs at a higher pace while having reduced operational cost. In addition, the management team and overall employee skill sets have improved, allowing Gary and Craig to step back a bit.”
Reece said that he has watched Carrel and Grigowski “become less reliant on outside influence and much more self-assured in their leadership roles.” He said that the 20/20 strategic business plan, developed in 2010, “drives their major decisions and has helped them shape the company for the future. They have hired and trained leaders, allowing the two [owners] to step back a bit from the day-to-day operations and focus more on long-term improvement strategies while grooming future leaders. I see much more confidence and leadership in the two as they learn to operate from a higher position.”
Belew echoed the others. “I think Management has become more focused on objectives and taking effective actions to meet those objectives. Team 1 was a very well run organization when I joined the Board; but over the last few years, I’ve watched an impressive maturation in Craig’s and Gary’s leadership and in the management team.
Having an Advisory Board means that “The CEO or executive team is not obligated to take the advice of their advisory board, and it is entirely up to them … to follow that advice,” according to ceriusexectutives.com in its article, “An Advisory Board vs. Board of Directors – What’s the difference?” They are “a hand selected, informal committee of people with no legal responsibilities to the company and whom have no voting rights.”
Carrel agreed, saying that the members of the Advisory Board are “purely third party advisors who give the owners feedback and challenge us on issues. But, at the end of the day, it is the owners who will make the final decision.” But, that doesn’t make them invaluable or unappreciated.
Carrel said that the Advisory Board has been a huge benefit to Team 1’s owners. “We have had fantastic board members who take time from their busy schedules, with minimal compensation, to help Team 1 Plastics. We look forward to our board meetings and always feel that it was a productive dialogue with an excellent exchange of ideas. We value everyone’s opinion and try and incorporate their feedback into our future plans. We may not follow their advice exactly, but it provides a great way for us to bounce off plans and ideas with our board members and use their input to make better decisions moving forward.”
The exchange of ideas is not only beneficial to Team 1, but the Advisory Board members see the value they have received from serving. Belew said, “I believe I’ve probably changed and benefitted more from my time on the Board than Team 1 has benefitted from my contribution. Craig and Gary have assembled an impressive group to form their Board, and I thoroughly enjoy my time with the Board and have learned a great deal from my experience here. I very much appreciate the opportunity.”
Even the first-time attendee at the February 2017 Board meeting, Rothenbuecher realized the benefits, “Knowledge of the fellow board members on their areas of influence and expertise was very insightful and provided me with information and thoughts on areas where I can improve my practice. It was not only a ‘give’ by the board, but also a ‘take.’”
And, the Advisory Board members said that they are pleased to be able to contribute to the success of Team 1 Plastics. Reece summed it up, “I am honored that many of my suggestions have been implemented.”