Is Your Company Ready for a Real Board?
Col. Jessep: You want answers?
Kaffee: I think I’m entitled
Col. Jessep: You want answers?
Kaffee: I want the truth!
Col. Jessep: You can’t handle the truth! – dialogue from the film A Few Good Men
Many entrepreneurs, especially younger ones, believe that forming a board is a significant step in helping to ensure their enterprise will be a success. Quite honestly, I could not agree more. A properly structured board can be an invaluable asset in an enterprise’s journey to prosperity. So if this is the case, why doesn’t every company have one and for those that do, why aren’t they always successful?
A starting point in this process is to determine the type of board you want. There are advisory boards and a board of directors. They are not the same and you can read my blog of August 21, 2013 to understand the difference. Suffice it to say that a number of great mentors, who I think would make great board members, eschew an advisory board position. They believe that an advisory board has no teeth and thus no requirement to follow up on valid concerns raised or suggestions for change. An advisory board can be very valuable but it is just that, so to have a real board is to have a bona fide board of directors.
A board of directors has a fiduciary responsibility and properly structured, actually requires a CEO to report to them. So this is where the rubber hits the road – – are you ready to have someone else provide that level of corporate governance in your world? There are some mindset issues you should come to grips with before heading down this path:
1. Are you willing to listen? Good board members will raise valid issues / concerns. You have to be prepared to listen and understand their point of view and then follow up to resolve any open items.
2. Are you defensive when you are criticized? This is part of what a board does – – question your strategy or actions. If you just respond defensively or believe their points are all off base, you either have the wrong board (a possibility) or you are not ready to be guided by others.
3. Do you know what you want from your board? Having this vision will allow you to set the scope for directors and even help define the information flow (the so called “board package”) so your board will be effective.
4. Do you have the right people? Keep in mind your objectives and having smart, independent thinkers will allow you to maximize value, but the cost may be strong challenges to your own thought processes and decisions.
5. Do you have the time? You need to spend time recruiting board members, setting agendas and following up. If you think it is a hassle and it becomes perfunctory, you will not derive the benefit of a board.
So think long and hard before embarking on this journey. Once you can “handle the truth” and have the right mindset and people, you will reap the rewards of having a valuable tool – – a well-functioning board of directors.
