How to Choose a Board of Directors
When you hear the term Board of Directors, you might be inclined to think of a national corporation or legal firm; a massive operation in need of a centered focus. This mindset isn’t wrong, however, many businesses, large and small, rely on a Board of Directors to give their company structure and direction. What a Board of Directors helps businesses to do is to make well-informed decisions at critical junctures that truly serve the focus of the company. This is why this practice isn’t married to any one type of business – all successful businesses can benefit immensely from the diverse expertise and varying perspectives of its Board members.
In cases where the Board is not mandated, it helps to think of a Board of Directors as a second set of eyes before you put out a report, product, or service. This is especially true for small businesses and startups. Before you debut your work, it will need to be reviewed to ensure that it’s viable in the space where you’re launching. Cost will need to be forecasted to ensure it’s financially possible for said service or product to be developed. A Board of Directors will help you to hear and receive constructive criticism before a launch or creation of a product. For this reason, your Board of Directors needs to be in tune with what your company is producing and have the same passion about the company’s goals as you do.
When it comes to larger companies, having a Board of Directors may be mandatory, and they could hold much more power than you, even as the owner of the company. There are many reasons in which a Board of Directors would be mandatory and could yield a lot of power, including a Board member’s own personal investments within the company or their tenure within the company. In these cases, make sure you have the law of the land clearly defined for all parties.
As seen in a recent article on Inc., a Board of Directors can prevent one of the biggest roadblocks in business: stubbornness. It takes a lot of passion to start a company, and any company can fail if a goal is overshadowed by a need for success at any cost. In addition to your Board having the same passion for your company’s goals, the members should also have a diverse yet keen business mind to help you see past your own limits.
With these ideals in mind, here are a few of the key steps to take when choosing your Board of Directors.
What Type of Support Do You Need/Do You Have?
You must first be able to determine what type of support you’re looking for within a Board of Directors. What are your biggest challenges? Raising Funds? Experience in the field? Determine these factors before committing to a structure of your Board. This will help you to choose what types of individuals you’d like to invite to participate, as well as how formal the structure of your Board needs to be.
There are also many cases in which a Board of Directors either already exists as you step into a higher role, or, as mentioned previously, is mandated. Sometimes this can lead to the Board having a much larger role in the company, instead of just being a group there to guide and mentor you. This means that the Board is there to oversee all decisions, and can even have the power to vote you out of your position. In these instances where a Board of Directors is not particularly a welcomed necessity, it will be important to know their power and expectations as well.
Select A Few Members Who Differ From Your Mindset
One of the biggest mistakes you can make as a leader is to surround yourself with people that constantly agree with you. Doing so would make it very difficult to grow not only as a leader but in terms of how your company is performing as well. Without the push of a challenging opinion, you won’t have the criticism needed to ensure your product, service, or idea reaches all of the consumers that it can. While you will need to network within your field to choose a few board members, you’ll need to become comfortable with networking with non-direct competitors and in circles where you are not an expert. Making your presence known within different sectors of your industry and within others that may be related to your craft will not only strengthen your Board candidates, but will also positively influence how others view you as a leader.
Choose An Odd Number of Board Directors
Albeit it a simple step, this is a widely contested practice. While you will always be the one to make final decisions about your business, your Board will still need to have some pull to aid you in your decisions. If Board votes are constantly ending in ties, you will end up being involved in more Board processes than intended, making the process less beneficial. In having an odd amount of members, a decision will always be swayed in one way or another.
Strategies change, and so should your board members, if needed and if possible. You should always be on the lookout for new thought leaders. If there are people that want to work with your business, there’s no need to say no, as long as they make a great fit with the members currently serving. Investors are hard to come by, and if someone wants to gift you with their time instead of their money, adding them as a Board member can be a great way to get an equal value from their mentorship. As mentioned earlier, there will be instances in which your Board isn’t so interchangeable. It’s important to make sure you know the power of your Board and how your role fits in with the changing of members or things of that nature.
Ultimately, your Board of Directors should include people that you trust and that you respect. They can be as involved in the decision making processes as you wish, but, if you’ve chosen the right members, they can also be entrusted to make a sound decision on your behalf. Remember to do this early on within your company building stages – it will serve you well in the long run as you establish yourself and your business as a force within your market.