As a member of Boards I often found that I was involved in turf wars between some Board members and some operational staff. It wasn’t pretty when old guys (like me) want to run the business on a day to day basis (not like me) and it takes both great mental strength and tact to steer them away from becoming the de facto commercial or operations person.
In the second of a series of articles about Boards of Directors I plan to explore what i think a Board of Directors should do, and by implication what it should not. There is often a blurring of lines between what the operational team does and what the supervisory board should do… here are my thoughts for clearing up any confusion.
Whether you are a new start up, or a SME, knowing exactly what you wish your Board members to do is critical to ensuring a great fit for new appointees. Even for existing Boards its useful for them to be clear exactly what they believe they should be doing. The members of your board are possibly responsible for the following:
1. Select the CEO of the company, and then assess their performance. This means the board may be able to fire you from the company you started if you are the CEO. Part of the board’s job is to hold the CEO accountable for deadlines, plans, and delivering on strategy in a timely way.
2. Be creatively dissatisfied with your and your teams performance. The Board isn’t a lovefest, its there to get the best out of everyone and that often comes from being dissatisfied with whats happening, but in a positive and hopefully creative way that spurs the team to better performance.
3. Block or push for major events in the company’s life; fund raising, acquisitions, maybe even sale of the company to another company. This is part of the strategic management of the business for which the Board is also responsible.
4. Provide (great) sustainable strategic advice, without meddling. This is not easy… most people got onto Boards because they were good at doing things, once you are on a Board your look at other people doing things, the transition sometimes is not too easy.
5. Help with recruiting senior executives or key hires. Independent non-executive board members know enough about the company to make informed decisions, without being too tied up in the internal mix to become too personal about decisions.
6. Teach you about the nuts and bolts of the business, or processes as your business increases in scale. Depending on the stage of the company and the sophistication of your team, board members may help you understand the process to set e.g. your first real financial or strategic plans (especially if you are pitching to financial institutions), coach you on how to manage larger and larger multi-functional teams, or other nuts and bolts of building your business from a small start-up to a great business.
7. Reviewing performance. Not just operational performance, but also the company’s performance in therms of governance (how the business is run), risk (what could cause the company to fail) and Compliance (with the external rules that are imposed upon an organisation) often overseen by way of internal or external audit.
For more established boards, board members will be involved with risk and governance in separate more in-depth meetings. There may also be more specialized subcommittees such as being part of compensation committees, strategy reviews, financial and audit committees. So the board of a company may evolve quite a bit from an early stage company to a public one.
So, in a quick way this is what Boards of Directors should do. Anything i have missed out?