Five Strategies to Develop Your ‘Dream Team’ Board
- by Amy Errett
I’ve sat on both sides of the board table—as a CEO and as an outside director—so I’ve been involved in my share of “boardroom dynamics.” Finding members who work well together is critical to creating a powerful board. To be effective, directors must gel as a group. As well, directors and management must feel a sense of mutual respect and trust.
Choosing board members is just the first step. After selection, you must work with them to leverage their insights, knowledge and connections. Building a stellar board is part science, part art. Five strategies I’ve used with portfolio companies to build and grow great boards of directors follow.
Define the rules of engagement. Before asking anyone to join the board, make sure to clearly define what participation will entail. Draw up rules for the norms of behavior required to achieve productive dialogue (e.g., every member gets a chance to speak at each meeting), to make decisions, to record discussions, and to come to a consensus. Lively debates should be encouraged, but it’s important to stick to key issues to gain consensus and closure.
Conduct an annual board evaluation. Regularly measure how the board’s implemented recommendations have impacted your business, both positively and negatively. An annual self-evaluation should ask hard questions that uncover the real issues that inhibit effectiveness. How is the team working together? What problems have arisen? What’s working and what’s not? Has feedback been collected and acted upon?
Manage the board. Neither an overzealous board member who wants to direct every decision nor a slacking board member is an asset. Don’t be afraid to approach such members to discuss ways they can contribute beneficially. One way to approach this conversation is through social events, such as board dinners, before or after a formal meeting. This provides an informal opportunity to talk through issues that impact working relationships. If a board member still fails to work out, consider asking that person to leave.
Communicate. Clear, open and regular communication is vital. Information should be focused, timely and digestible. You can’t expect directors to stay up to speed on your business the way the management does; present them with the main facts and updates in a short document. The most important rule of board management is to avoid surprises. Make sure the board knows all pertinent information, good or bad. Don’t mislead your board. If you are stumped on a business move, admit it and ask for guidance.
Focus on substantive issues. A CEO’s job at board meetings is to keep the discussion focused. Busy directors will appreciate you keeping things on topic and on time. Always present a simple agenda with only substantive topics and get closure on each topic before moving onto the next. Keep the focus on important issues by presenting potential solutions—rather than open-ended questions—for immediate input. Hold administrative matters for the end.