We’ll be delving into some of these key points in greater depths later this month, but some of the key things you need to consider when putting your company board together are:
1. The right size
Boards don’t need to be massive. Your meetings shouldn’t resemble those depicted in Hollywood films, where dozens of suits cram around a gargantuan table for a spat.
Too many people will make it more difficult to reach a consensus, not to mention the impact on your non-exec salary bill.
As Daniel Sasaki of LDC argued in our sister publication, Real Deals, There is always a temptation to add too many apparently value-adding non-executive directors and specialists, with the result that arguments over strategy and operations can result in delays and even paralysis.
Small is often beautiful in this regard, with more streamlined boards able to move faster and be more nimble to react to unforeseen market moves or events, giving a company a better chance to trim its course and safeguard the business.
2. A good balance of skills and experience
Chairmen and non-execs don’t need to have experience in your specific industry. Their role is to be independent and bring a fresh perspective rather than simply echoing the views of the management team.
Instead it’s worth using these figures to fill-in a specific skill or experience gap where you may be lacking.
If you’re having to restructure or adapt to new market conditions, chairmen with experience of managing change will help you to make the right decisions. If you’re beginning to look to overseas markets, a non-exec with extensive export experience would be a valuable asset.
3. Regular and effective meetings
Boards need to meet regularly enough to be an effective force on the business but not so irregularly as to be a stranglehold. If regular meetings lapse then board members will have less of an opportunity to discuss the issues that face the business in a timely manner, but if they meet too regularly then the management team could get too caught up in focusing on board meetings rather than the business itself.
There’s much discussion as to what board meetings should focus on. Whilst looking at the financials is important to ensure the company is on a strong footing, its important not to get too caught up in figures. Some of the time needs to be dedicated to grander questions of business strategy and the long-term plan.
4. Good working relationships
This relates back to point two but deserves its own point. The working relationship between the board members, particularly the key triumvirate of chief exec, FD and chairman, needs to be solid.
While the CEO may be caught up in the grand vision of the business, they may need an experienced chairman and and FD who is grounded in the figures to help them keep the business on the right path. This is an area we’ll be exploring in greater depth over the next few weeks.
Different times call for different boards. The angel investor you recruited as a chairman or non-exec may have brought invaluable experience in your early stages of growth. But if you’re heading for floatation or exit, or going through a particularly rough patch, it may be in the interests of everybody for you to bring on board some new faces with the right kinds of experience.