5 Keys to Building the Perfect Board
Steve Louis, P.E., MBA | @CEConsult | 20 August 2018
An active and well assembled board of advisors is a powerful tool for any organization whether it requires guidance, governance, or access to untapped networks and resources. With the right combination of industry experience, areas of expertise, and strong leadership qualities, a board of advisors can be an invaluable resource for your business.
But how can you make sure you build the most effective board? In this article, we’ll take a look at the 5 basic steps to consider.
1. The Strength of Diversity
Ideally, you’ll want a diverse mix of board members, who are experts in various fields such as finance, technology, operations, executive management, human resources, legal, and how to raise capital.
Companies are now drawing from a mix of experience levels and backgrounds as well as becoming more gender equal in the boardroom. In fact this year approximately 31% of open board seats at 3,000 of the largest publicly traded U.S. Companies have gone to women according to a recent CNBC.com article. That's an increase of over 50% from 5 years ago.
The more diverse the voices are in your boardroom, the better they will be able to dissect the strategies set forth by the CEO and offer keen insight for enhanced decision making.
2. Invest in Youth
Most boards consist of senior executives, ex-CEOs and Directors, who bring 30+ years of valuable first-hand experience and well-established connections to the table. However, there is a new trend in recruiting board members who are new to the director/advisor role and thus can provide a unique perspective, different from their peers.
Look for previous board experience in the non-profit sector as a way to recruit strong, experienced candidates who have a passion for helping others succeed and have proven their capabilities as a leader and mentor.
3. Trust is a Must
The same guidelines that apply to building a high-performance team also pertain to forming a perfect board. You need to create an environment that is based on trust, honesty, and mutual respect among all board members and the management team.
Full transparency of the company’s finances and performance is paramount. Board members must be able to understand the method in which the financials are presented and trust that there is no accounting smoothing which may understate any future problems.
Finally, all board members should recuse themselves if any conflict of interest may arise based on their outside interests and positions.
4. Dissenters Welcome
Although it may be unpleasant at times, you need someone willing to play devil’s advocate.
Dissent is good in the boardroom. We would argue that it’s a necessity.
Your CEO must be resilient enough to withstand the challenging and sometimes uneasy interrogations that come from the board. In fact, all executives should expect and welcome this level of questioning before executing an important business strategy. Ensure that you recruit a board who will speak up and challenge the status quo to capture the full value for your organization.
5. Give Feedback
According to a study by Korn/Ferry, boards rarely have their performance assessed. Only 33 percent reported the practice of evaluating the entire board’s performance and only 18 percent regularly evaluate individual performance.
Even the most prominent board members deserve the opportunity to know how they are performing so they in turn can improve their value to the organization. Create a comprehensive performance evaluation system and make sure it is utilized regularly for each board member.
Clearly stating the company mission and vision with SMART (specific, measurable, actionable, realistic, and time-bound) objectives will ensure everyone is in full alignment.
Start Building
If your company is in the early growth phase and without a board presence, start with recruiting just 3 individuals who are proven leaders and whom you trust. You can add more advisors as the need arises. Most board members will not expect to be compensated initially, but as your company evolves, it may be prudent to provide some level of compensation in the form of a fee or equity.
Building a board of advisors is not often the first priority on a company’s agenda, but if you take the time to follow the proper steps, you’ll be rewarded with a competent, experienced board who can help with the toughest business decisions – and ensure the future of your company is secure.
Keywords
#board #advisors #strategy #genderequality #growth #recruit #governance