Your Board – Guide to Success & Not a Consultant

If you are the company owner or CEO/President, you should have an engaged board of directors. Many, even most, small and mid-size companies do not have a functioning board of directors. The corporate papers for these companies may list board members, but the board is not functioning as a value accelerator for the company.

I know the arguments. Dealing with board members takes up valuable time. “They don’t know as much as I do. How can they help me?” “I know what is needed and don’t want someone looking over my shoulder.” “Having a board is a pain in the butt!”

An engaged board of directors will make your company more successful and will make you into a more successful leader of your company. An engaged board will set expectations, review performance, be a reality check on potentially making big mistakes, and coach you as the leader. Yes, the board has fiduciary responsibilities, represents the interests of shareholders, and is responsible for governance and compliance with laws and regulations. But many leaders don’t appreciate the potential value of a functioning board of directors for their success and the success of the company.

I serve on the national board of directors of the Private Directors Association, PDA. PDA is the professional association of directors of private companies. We offer training for directors serving on private company boards and bring best practices to boards of privately owned companies.

PDA offers companies a platform for finding qualified directors. When a company is looking for a new board member, the opening can be posted on the PDA website.

These postings often reveal a major misconception about the role of the board of directors. The required qualifications for board positions posted on the PDA website are sometimes a deep understanding of the company’s technology, customers, competitors, or markets. Little or no knowledge or experience in a successful board of directors role is required. Governance, financial planning and review, leadership and staffing, regulatory compliance, management practices, etc., are seldom mentioned. CEO or other leadership experience in a comparable and non-competing business is not included.

To be clear, PDA is not responsible for director posts like this. But the postings do show what, too often, companies are looking for when they bring on a board of directors member.

These postings are basically looking for a lower cost consultant. The companies are not looking for someone who will help the company succeed as a business and help the CEO/President succeed in their role as a leader.

If you are in an industry or business where the technology, regulatory environment, or some other fundamental is changing, recruit an Advisory Board. Bring academics and consultants onto an Advisory Board who are experts on the broader trends or the specifics of your business. Meet with them two or three times a year to share your plans for the company and hear their views on where things are going. You will pay them something for serving on the board, but it is not a big consulting fee. Buy them a nice dinner! An Advisory Board is not a fiduciary board – your board of directors.

Much of my career was working as a management consultant with Arthur D. Little, Inc. I know the value an experienced consultant can bring to its clients. If you must have an on-target assessment of where your markets or technology are going and that work is beyond the capabilities of your staff, hire a qualified consultant. Don’t try to get a consultant on the cheap through your board of directors. That is not their job.

Your board of directors is a valuable resource for connections and industry expertise. Every board member brings their network and access to resources to the board. Your board members’ insights and judgements drawing on their experience are crucial contributions to their board work. But don’t look to your board to be your marketing, sales, or technology consultant.

When I talk to a company about joining their board, I am clear that I am not a domain expert in their business sector. If that is what they are looking for, that is a red flag to me that the company and its leaders do not understand the role and responsibilities of the board.

Yes, working with an engaged board of directors is a significant time and energy commitment for you and your senior leadership. Yes, the board can be exasperating and even a distraction. Yes, board members will not know as much as you do about the company and the challenges you face. But the board that is asking you the tough questions, setting expectations, and judging performance will make your company more successful and will make you more successful.

Written by Rick Williams.

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