How To Build a Better Board by Focusing on 7 Strategic Areas

A good pedigree alone does not make a board of directors great. Sure, it is nice to have a board with an impressive resume whose members are viewed as experts in their field, wealthy, renowned, prominent, and well-connected. But that recipe does not necessarily equate to effectiveness. To have a board that excels at corporate governance requires more elbow grease than nuance, more cultivation than a reliance on expectation.

Good governance is important to any type of organizational structure—whether you are a sole proprietorship, partnership, limited liability corporation (LLC), or corporation. But it is the responsibility of a corporation’s, and sometimes (depending on its structure) an LLC’s, board to warrant that good governance results in the health and financial viability of an organization. It is only through an adherence to rules and ethical practices for operation and a sincere concern for stakeholder interest that this can happen.

Only by paying as much attention to your board as your business model will your corporation be prepared to properly respond to critical challenges and maximize opportunities. Don’t leave it to chance: Roll up your sleeves and take a dive into effective board management.

This is easier said than done. With most boards falling in the range of having three to 20 directors, that’s three to 20 people with individual schedules, interests, and outside responsibilities. When they come together or interact with your team for meetings or other duties and responsibilities, they need to be well prepared to make decisions on strategy, priorities, and risk management and capable of speaking from a position of knowledge about the corporation’s business and market.

This cannot happen by selection and an expectations of attendance at meetings alone. You and your management team need to make it happen by developing and maintaining systems around the following seven key areas.

1.        Onboarding

Develop an onboarding process where new directors meet each other and the team in an informal setting before their directorship begins. Encourage open dialogue from the start so they are comfortable with asking tough questions and feeling safe when doing so. Put together a board manual that will become a valuable resource to increase their effectiveness as a director. The manual should orient and educate directors about who your corporation is and what you do. It should also offer useful information and tools about your corporation, operations, board structure, their roles and responsibilities, and fellow board members and team members.

2.        Meetings

Finalizing packets at 11:00 p.m. the night before a meeting leaves you and your team unprepared to present and your directors equally unprepared to offer input at meetings. While you may be telling yourself that you are taking the time to get things right, your packet represents books that should have been long closed and work initiated during the last quarter. Your procrastination demonstrates indecisiveness, poor planning, an absence of ownership, and a lack a respect, along with the possibility you are trying to hide something and leading others to question if everything happening in such a manner at the corporation. Board meetings should be set on the calendar at least a year out, packets completed and sent no less than three to five days before the meeting, presentations finalized and practiced, and logistics choreographed as if you were running a military operation.

3.        Communications

Timely and meaningful communications should be your standard. For delivery of your packets, consider using board portals or document sharing solutions. Establish a regular rapport with your directors in the form of a weekly or biweekly electronic memo or video of things they should be aware. Limit your regular updates to the top three or five things they know. Set up a point of contact for them beyond the CEO from whom they can expect to receive confidential messages, press releases, and news. Keep them well informed instead of holding on tight to your cards.

4.        Relationships

Relationships aren’t always easy—especially among strong-minded individuals and known problem-solvers. The most effective directors have good relationships with their peers, executives, team members, other professionals and stakeholders, and depending on the size and location of the corporation, customers and vendors. Before they can truly inspire and influence others, your directors need to build strong relationships with each other and your team allowing for candor and encouraging trust and respect. Create opportunities where directors can start and cultivate relationships with a schedule of both formal and informal events throughout the year.

5.        Structure

Boards are at their most vigilant when they follow the bylaws, operating rules, and procedures, understand roles, and embrace committees. Board members can be outstanding advocates but only become adept when their engagement is high. Operating and ad hoc committee participation is one of the best ways to deepen their knowledge of the organization, forge lasting commitments, create raving fans, and build beneficial relationships. To ensure engagement, these committees should be relevant to business operations, understand their function, establish goals, meet regularly, and be supported by team.

6.        Composition

Business models and effective oversight need to evolve with strategies and markets in order for companies to remain competitive. When it comes time to evaluate board composition, you must be open to considering who is currently on the board, what skills and attributes they bring, and what is needed. Gender, sexual orientation, age, race, ethnicity, and perspective should not only be given weight for membership, but also the range of skills, backgrounds, personalities, tenure, and experiences. Only by committing to a diverse perspective can you outwit the perils of groupthink and encourage respectful dissent and nonconformity of thought leading to excellence.

7.        Accountability and Evaluation

Most members of your board will have an affinity for numbers and know that numbers do not lie. Once of the best ways to arrive at a level of board composition and accountability that is most advantageous to your corporation is to evaluate all directors annually or at the end of terms. Board evaluations do not need to be intimidating or lengthy, they simply need to quantify whether or not directors are meeting expectations with active attendance at meetings, resource sharing, and contributions to engagement whether that be in the form of committee participation, well-thought-out feedback, or operational assistance. A simple spreadsheet with key areas identified and assigned rankings of one to three will be suffice in showing you who is committed and who is ready to cycle off.

Only by paying as much attention to your board as your business model will your corporation be prepared to properly respond to critical challenges and maximize opportunities. Don’t leave it to chance: Roll up your sleeves and take a dive into effective board management.

Ready to build a better board? Draw on the expertise of The Bulb team to create solutions tailored to your needs.