Five Tips for Building a Strong Board of Directors
Assembling a viable board of directors can be challenging, and as a result many entrepreneurs forgo the option entirely. However, despite these obstacles, a well-constructed board can significantly improve a business’s chances for success. After all, it is usually more effective to get several sets of eyes on a potential decision in lieu of taking a stab yourself.
That said, the board building process must be traversed carefully to mitigate future problems and ensure the board is serving its intended purpose. If you find yourself in the planning stages and are unsure of where to start, here are a few helpful tips for achieving your vision.
Set clear goals and limitations
Any successful board of directors must be preceded by a broad goal; otherwise, its implementation will have little point. This notion is rarely overlooked, but it must be considered as board members are selected. From here, you will be able to establish bylaws pertaining to board functionality as your goals are pursued, including the hierarchy of decision making authority and the amount of time a board member is permitted to uphold tenure.
Invest in independence
There are a variety of traits and skills to look for in a promising board candidate, but arguably the most important is independent decision making. You should strive to bring on those who would sooner quit the board outright than blindly agree with something that may be harmful to the company at large (though, obviously make sure they are in it for the long haul, regardless of final decisions). So-called “yes men” and “yes women” need not apply.
Pick a strong chairman
Your board selection process must be meticulous, as one weak link could create a storm of otherwise avoidable issues; naturally, this means electing a strong, effective chairman to serve as the board’s nucleus. In most cases, your chairman candidate should have at least five to 10 years of experience in a directly applicable role (usually a similar board-based leadership position or management role), and he or she must exhibit competence as both a mentor and a confident decision maker.
Hold effective meetings
Once you have built your new board of directors, it is important to note that, while this stage of the process may be over, the development process has only just begun. Therefore, it is key that you conduct effective meetings — especially early into the board’s existence — to establish both productivity and cohesion. Today’s board meetings tend to be roughly comprised of 20 percent presentation and 80 percent discussion, so empower your board members to start vocalizing their views and insights right out of the gate.
As your board begins to thrive, be sure to uphold a culture of transparency between all board members; this means “being upfront about changing board members as your company grows,” confidently identifying new external candidates, and initiating other potentially difficult conversations. No one wants to feel blindsided or undervalued, and favoring such tactics is a quick way to unhinge the board as a whole.