Building a board of directors is a daunting challenge, but good planning is essential to setting the tone for success right from the start, promoting a successful start to the next level, and meeting the long-term needs of a fast-growing business.
Here are eight things you should know about the complex art of building a board of director
Look beyond your investors
According to FourCreeds, It is important to remember that investor integration does not fit the board’s structure, so avoid automatically assigning a board chair to all your investors. In most cases, some people are prepared better for this than your investors. Without a working technology, market, or global investment to fit the chair, many investors would be distracting – rather than adding value – to the board. Similarly, while the founder is an integral part of the team, they are not the best person for a board chair.
Find a chairman who’s been there
To help set the right tone from the top, find a great, experienced chairman you have ever had before. Choosing a chairperson based on non-board experience is a big mistake – and that happens very often. Your nominee must have at least 5 to 10 years of board experience and must effectively manage the interests of stakeholders within and outside the company and negotiate with confidence and skills.
The chairman should also play the role of CEO Coach – a person who can advise, redirect by suggesting remedial measures and assist in recruitment.
Be at the forefront of changing board members as your company grows. Keep your dialogue with board members consistent, open, and honest. Doing so will ensure that your board members are not blindfolded or feel “lowered” when a change is needed.
Increase the size of your board
I once sat on a company board with 40 employees, four top executives, and nine board members – which was at least four board members! While the appropriate board size varies from company to company, knowledge has taught me that five is usually the magic number for a Series B company, which grows to seven for a pre-IPO business. Keeping the number of board members low ensures a diversity of ideas while maintaining discipline, focus, participation, and commitment.
Plan for the long run
The best boards have the right mix of skills, abilities, and ideas. So think carefully and thoroughly about whom you choose on your board. Be particularly thoughtful, especially in choosing your independent directors as your organization grows. An independent director will play an essential role in shaping your organization’s culture. And guiding it on the path to success. And imagine that you can work with each person for five to seven years. So make decisions with a long term in mind.
Avoid applicants who want board seats
A good rule is to avoid putting themselves first onboard positions. These people are more likely to be interested in their goals than your company’s goals and interests. Your best choice may be too busy to worry about their next board position. Which means you will have to convince them to work with you actively. Hopefully, it will be worth the extra effort.
Set clear expectations to build trust
It’s not just about getting the right team together. From there, you have to make the board work to benefit. Transparency and clear communication are essential to building trust and good governance. It is also necessary to spend time together outside the living room to develop relationships. And build trust between board members. Organize an annual strategic meeting, full-time and part-time, informal meals to help increase the board strength.
Make meetings meaningful:
The chief executive needs to meet with a system that will work and be ready to manage and be demanding when needed. Preparation for the conference is vital; ensure that items are distributed well in advance. Board members have sufficient time to review the information and arrive at a meeting ready to discuss real issues.
Work, patience, openness, and communication are all necessary to build the ideal board. Ultimately, your reliance on your board member team will get you through the tough times. While the right mix of players will improve performance and results needed for success. We recommend you hire a board placement firm such as recap to help you find the best board members. Companies, which specialize in board placement, have a lot of experience in finding ideal candidates for different industries.