« There are few experiences that can have such an extremely different outcome on the spectrum from total nightmare to self-fulfilling achievement, but sitting on a board of directors is one of those experiences. When one has the privilege to serve on a good board it is both a pleasant, educational, and a rewarding experience. When the opposite is true, it can be exacerbating, draining of energy, and very frustrating. I have personally enjoyed the former and attempted to turn around the latter with varying degrees of success. In this blog post, I would like to provide some of the characteristics I find to be common in a good board. »
In most organizations I have been a part of – whether it is a public corporation or the youth organizations I serve on the board of – I always find if there is strong leadership, it leads to a well-run company and a well-functioning board. With a confident and mature CEO there most often will be a strong lead director or chair of the board. Both of these positions must be filled with well-meaning and strong individuals of integral character. If not, the leadership on the board must be instrumental in weeding out unqualified board members and those board members who are disruptive unprepared. Some may need coaching and others may need to be plainly relieved of their board duties.
A well-functioning board requires diversity of thought, experience, gender, and culture. If all of the board members think and act alike, their decisions will reflect their lack of diversity. I don’t only mean culture and gender. Well run boards also reflect diversity of age, experience, and industry that include complementary skills such as risk management, channel distribution, sales, marketing, human resources, compensation, information technology, finance, fundraising, and industry vertical knowledge. A board needs to be clear about duties, roles and responsibilities of it’s directors in the recruiting process to ensure that applicants expectations and the company are aligned.
Directors who leave their egos at the door
When a board consists of directors who have the company or organization foremost in their minds and feel they don’t have to prove themselves most often make the best contribution to the company. These characteristics are most often present in confident, seasoned executives who have accumulated several years of board experience. All directors need to have their interests aligned with the company. When there is the existence of venture capital investor appointed directors, these directors need to be focused on the strategic direction of the company. That is often not the case and detracts from having a high functioning board.
A organization with a strong strategic direction where the CEO, chair, directors, and management is most often the organization that will have a strong board and be successful. Whether it is a start-up, a charity or a Fortune 500 company. When the board is holding the CEO accountable for this strategic direction and the directors are not getting their fingers, or worse, noses into the weeds or micro-operations of the company, the best chance of success exists. I have often experienced boards where the director has a lack of governance experience and education. Often, they compensate for this by getting into the minutiae and minor details of the operations of the organization. When directors are mature, experienced, educated and confident in their board roles the resulting board is most often well functioning.
Strong committee structure
A high functioning board will have strong committees with good leadership that will do the heavy lifting on specific board work that will include committees such as audit, compensation, governance and risk. Then based on the need and complexity of the company there will be committees for IT, cyber security, investment, finance and merger and acquisitions when required. The directors will be confident in discharging their duties when they are presented with well-framed reports from the committees of the board.
The days are over when a board member can hold down 10 or 15 board roles. As an individual board member, you have to be committed to the agenda and work of the board you sit on. A board member should have the time and schedule flexibility to be able to attend between five and nine board meetings and another five committee meetings a year and be substantially prepared for those meetings by reading the pre-meeting materials. A director can not deliberate and participate in a discussion without being prepared. In the case of a large bank board the suggested time commitment is half of a full-time career position. Even if you are on the board of a growth stage private company that is raising financing or being acquired, the time commitment can be substantial for extended periods of time. Therefore to ensure your board is high functioning you require board members who have the proper amount of time a schedule flexibility to discharge their responsibilities properly.
When these characteristics exist whether it is in a tech Start-up or multi-billion dollar company the participation in this high functioning board of directors will be both a rewarding and educational experience.
*Gerard Buckley has been working in the financial industry for over 32 years, helping companies strategically plan for accelerated levels of growth at Scotia Capital, Maple Leaf Angels and Jaguar Capital where he is now Managing Director. He leads a management consulting practice with mandates focused on growth in entrepreneurial companies and is an expert in structuring companies to access financing by employing governance, financial management and funding strategies. Gerard has worked on Merger & Acquisition teams transacting over $10 billion of deal flow in his career.As an experienced investor and a member of Angel Investment Networks, he understands the process of investment in growth private companies and advises CEO’s on how to prepare. Gerard is Chairperson of The Board of Directors of Maple Leaf Angels Corporation and was the Entrepreneur in Resident at INcubes, an internet accelerator based in Toronto. He served as a member on the Small and Medium Enterprise Committee of The Ontario Securities Commission and has served on the board of an Exempt Market Dealer and a TSX.V Public Company. He has a passion for helping young entrepreneurs prepare their companies for scale. Read more about Gerard’s advisory firm at http://www.jaguarcapital.ca.