Board of Directors Management

An effective board can mean the difference between an ordinary company and a great one
by providing important subject matter expertise as well as deep industry experience.

/ Finance / Board Management

Managing a strong, effective board will inevitably make you a better manager and improve your company’s chances of success

What is Board Management?

Board Management is how a company’s management team composes its Board, communicates with Board members and how the Board of Directors is governed.  By following some best practices, relationships and interaction between a CEO or founder or senior management team and its Board of Directors can be optimized for maximum effectiveness.

Purpose of the Board of Directors

Companies and organizations are governed by a Board of Directors composed of members who periodically meet at a Board Meeting. The Board Meeting is where issues, solutions, and strategies are discussed for the benefit of the company. While rules, Board Meetings and Board Committees such as Audit Committees tend to dominate discussions about Board Management, there are other pro-active steps management teams, founders and entrepreneurs can take in managing their Boards. Key responsibilities of a Board include:

Oversee. Guide. Decide.

Deciding the big issues
The Board oversees the business for many processes and procedures around strategy, risk and exposure. It helps guide the management team and decides on corporate matters that cannot be delegated to lower-ranking officers.

Monitor

Performance and Plan

Key Performance Indicators (KPIs) are the key drivers of a business.  A Board will expect to review a dashboard of KPIs that can include Revenue, Sales Pipeline, Cash and other financial metrics such as Net Income and EBITDA.

Budgets & Priorities

Sell Products and Services
The Board will review and approve corporate budget ranging from capital expenditures to how many people to hire in your organization.

Select (and Dismiss)

The Board will be involved in the selection — and sometimes dismissal — of key executives and officers.

Board Management Best Practices

Managing a board of directors can be a huge challenge even for experienced entrepreneurs. What do they expect for a meeting agenda? What should we pay our Board? Should we have independent Board members?

The preparation that is required to present your story in a concise and accurate fashion during a Board Meeting can take days of time from you and your team. And just when you get through one meeting, it can feel as though you must start preparing for the next. Many entrepreneurs complain of the endless cycle of preparing for board meetings. And in our experience, most entrepreneurs view board meetings as a necessary evil and something to manage away.

It doesn’t have to be that way. By following a few basic principles and avoiding some of the more common mistakes, you can make board interactions — including meetings — a positive experience and leverage the valuable experiences of your board members to help you navigate the growth of your business.

To Dos:

Do get to know your individual board members

Spend some time with them outside of official meetings and ask them what their expectations are for board meetings.

Do invite your management team to participate

Have the leaders of finance, sales, marketing and operations lead the discussions regarding their areas of responsibility. Emphasize the strength of your team and enable them to be part of the planning process with your board.

Do bring in an independent board member ASAP

This person should neither be a part of your team nor an investor. Independents can inject some much-needed objectivity into an environment that can become insulated. There is usually a cost to bringing on non-investor board members, but the potential benefits far outweigh those costs.

Do control the agenda

Enable others to provide input, but structure the agenda to achieve your goals. If the sales pipeline is your primary concern, make sure you have organized your presentation to enable you to cover the issues you want to cover and to agree on a plan.

Do provide board with materials in advance

One week is ideal. Let your board members know that they will be expected to have reviewed the material so you can spend the time discussing important issues and not presenting the basic material.

Don’t Dos:

Don't let discussions drag on (and on)

Keep things moving to remain on your agenda and make it clear when a decision has been made or when you have adequate input to make a decision. Too often, a board meeting can devolve into side discussions as members try to outdo each other with stories that are important to them or that demonstrate their knowledge, but do little to help you run your company.

Don't schedule too many meetings

The ideal board schedule is 4 in-person meetings per year with 1 or 2 additional phone calls to do a deep dive on a specific subject (new product launch or your marketing campaign for example). Try to resist calls for more frequent meetings. Some new company Boards may demand monthly meetings. You can do this for a year or so but push to reduce the number of meetings once you’ve demonstrated control of the agenda and topics.

Don't overlook your presentation materials

While it can seem that board meetings keep you trapped in an endless cycle of presentations, if done properly, these are the exercises you should be doing routinely as a way of managing operations, fundraising or engaging in an M&A discussion. Be sure to clearly identify the metrics that you think tell the story and work with your team to refine them and ensure their accuracy.

Don't underestimate the power of your board

They are your direct boss and you need to treat them with respect and respond to their queries and advice. As with managing your staff, it is important to set goals, review progress and alter your strategy if the circumstances dictate.

Board Committees

Committees can be a divide-and-conquer mechanism to help with the workload of a Board. They can efficiently focus more deeply on issues and make recommendations to the larger Board.

There are varying thoughts about Board Committees.  For a smaller and cohesive Board, they may not want committees at all, except for the formal governance requirements necessary for groups like the Audit Committee.

Other Boards may consider committees an essential component to how they are structured.  Common Board Committees may include: Executive, Development, Nominating, and Governance committees.

Good committee practices, include:

  1. Clear Goals and Job Description as defined by bylaws
  2. Strong but inclusive Chairperson
  3. Committed Members who invest the requisite time to be effective
  4. Clear evaluation process and decision making criteria.

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