Many fledgling companies follow similar patterns of development as they evolve from the point of inception through to maturity , and this is typically reflected in their board structures.
Startup companies, for example, commonly rely on the vision and capital resources of the founder to begin with. The first top-level appointment is usually that of the Finance Director who takes responsibility for budgets, raising capital, banking and reporting revenue, monitoring costs, identifying trends and generating forecasts.
The next appointment is often a Marketing Director who can position the company in the market, contribute greatly to its overall vision and strategy, promote its goods and services and generate more revenue. In addition, they tend to be able to assimilate data from a range of sources and interpret it capably, so they have a role in helping the board make sense of arrays of complex data in decision-making.
Very enlightened CEOs may also recognise the value early in the companys development of having an HR Director. Without this resourcing leadership, even senior individuals may struggle with the challenges of management, especially in a challenging economic climate like todays. A good HR Director can be invaluable, not only in keeping organisations out of employment tribunals but also in ensuring that the organisations strategy includes sufficient focus on having the right people to implement it.
Diversity at the top
All directors must be able to apply clear and independent thought to the challenges they face, avoiding where possible the perils and limitations inherent in group think that may mean decisions are insufficiently thought through.
This requirement underpins the argument for encouraging boardroom diversity in areas such as directors gender, ages or backgrounds.
Supporting board-level diversity can start close to home with a review of succession planning mentoring and talent spotting in-house. The key to success is to review carefully what talent already exists in the organisation, what gaps there are currently in the combined skills portfolio of the top team and to analyse what problems are currently occurring, before attempting to find a solution.
Finding experience without the price tag
An effective and balanced board needs new and fresh talent but there is no quick route to gaining experience – and learning from those that have been on the front line and come out the other side can be invaluable.
The good news is that there is no shortage of seasoned directors who might provide both insights and depth of experience in a non-executive capacity.
Smaller companies may consider their salaries and benefits are uncompetitive when it comes to attracting this level of experience. But more experienced directors may already be financially secure and simply wish to top up their savings or their pensions while making a worthwhile contribution in a new and challenging role.
Where to start
One way to appreciate how your board might operate better and/or might benefit from particular skills or experience is through conducting a board evaluation.
An evaluation can identify what the board is doing well and target areas for improvement such as gaps in the boards knowledge or a need to overhaul board processes. It doesnt necessarily require a great investment either.
If the main issue is of a specific skills deficiency then an interim appointment might be an effective way to identify or secure the talent needed on a short-term basis before deciding to make an additional permanent appointment.
Furthermore, organisations looking to fill identifiable skills gaps in their senior team should pay close attention to director development.
Not only could training solve issues in terms of board effectiveness but specifically tailored director training can increase an organisations appeal as an employer to top talent.
It will also provide confidence to individuals about to take up board positions for the first time who want to avoid making a fool of themselves in the boardroom!
Dr Roger Barker is director of corporate governance and professional standards at the Institute of Directors.