Establishing a board of directors is more than just an obligation — it can be your secret weapon. A well-architected and well-managed board gives founders access to a broader network, proven operational advice, and entirely new ways of thinking. And while anyone can technically start a board, making it successful requires careful thought and intention.
There are plenty of articles, books and memes out there about how to run successful public and non-profit boards, but not as much candid advice on what does and doesn’t work for boards in the private sector.
So we sat down (well, Zoomed actually) with two of the most talented board builders and members we know — Allison Pickens, founder & investor at The New Normal Fund, and Ryan Denehy, founder & CEO at Electric — to hear their first-hand stories and tips.
Below are a few highlights from that conversation, but I’d encourage you to check out the full conversation here.
Forming and norming
The process and timing for forming a board will look different at every company. Some founders form a board immediately but treat it more as an advisory group for years. Many wait until they take capital and create a more formalized board as part of that process.
There’s no one answer, but the consistent advice from Allison and Ryan is to first carefully consider the capabilities, experience, and personalities that will compliment you and your executive team as you grow the business. When evaluating board members, especially independents, spend time assessing how your team works and what experience is missing on the team. Perhaps this is your first company and you need more operating experience. Or you want to add a customer to ensure the Voice of the Customer is front and center. Or you need industry-specific expertise and connections. Or you want to see how a potential new executive thinks before bringing them on board.
When evaluating board members, especially independents, spend time assessing how your team works and what experience is missing on the team.
That said, the devil is in the details. Bring on board members you can feel confident working with throughout the good times and the bad. The members of your board should serve as an extension of your team and share a passion for your company’s mission. As Ryan so eloquently put it in the webinar, the last thing you want is to end up with “a group of part-time bosses.”
Aim to keep the number of board seats small at the beginning. This could mean keeping the board to just you and a co-founder. Or the founders, your investors plus an independent. An independent board member can provide a fresh, unbiased perspective to your board and help diversify your dialogue in meetings to spark new ideas.
An independent board member can provide a fresh, unbiased perspective to your board and help diversify your dialogue in meetings to spark new ideas.
Diversity should be top of mind when it comes to board makeup, both from a gender perspective but also race, ethnicity, abilities, sexual orientation and those with non traditional board backgrounds. While many board members will have a background in finance, product and operations, consider how valuable it would be to have a Chief People Officer or Chief Marketing Officer at the table when making business shaping decisions — especially in today’s environment.
It’s a founder’s fiduciary obligation to the business to ensure a diverse range of thinking. In our conversation, Allison recommends looking at diversity across your board and executive team as a whole, when architecting for diversity. Having a board and leadership team that reflects society as a whole sends a powerful message, from the top down, that diversity, equity and inclusion is part of the company’s DNA.
It’s a founder’s fiduciary obligation to the business to ensure a diverse range of thinking.
Finding diverse candidates in your existing network might not be easy, but there are entire organizations dedicated to presenting minority board candidates to the companies that need them. Organizations like All Raise, theBoardlist and Athena Alliance, can serve up a list of potential candidates “on a silver platter”. Work with them. Don’t be a hero.
Once you’ve assembled the best minds, aim for minimal overhead and avoid multi-layered committee structures in the beginning. If you’re a $5M startup, you probably don’t need an audit committee right away. However, at a certain scale, a compensation committee might make sense to instill discipline around pay and equity, especially at the more senior levels.
At a certain scale, a compensation committee might make sense to instill discipline around pay and equity, especially at the more senior levels.
There may come a time when a member has contributed all that they can to your business, and that’s okay. Remember, this is supposed to be a collaborative, beneficial professional relationship, and as the company evolves, so should your board. To ensure you have the room to restructure your board in harmony with the needs of the company, you may want to implement term limits for your board members or establish a mutual check-in date. This gives you and each board member the opportunity to align on expectations and the grace to make changes for the sake of what the company needs at that time.
Creating an environment to engage, not direct
The notion of big, formal, multi-day, in-person board meetings are becoming less common, especially in light of the pandemic and the pace of business today. Allison and Ryan anticipate that as things progress, there will always be a place for both virtual and in-person meetings. However, those in-person interactions make a huge difference when it comes to trust and engagement.
There will always be a place for both virtual and in-person meetings. However, those in-person interactions make a huge difference when it comes to trust and engagement.
Organizations differ greatly in how frequently they meet. Most meet at least once a quarter, while some in the earlier stages of a company might meet every 6-8 weeks. Aim for shorter meetings, no more than 3 hours for virtual sessions, with a big focus on the prep materials. Those prep materials might range from a 70-slide presentation with data and program highlights to a simple well-structured memo. To cultivate a productive meeting, send meeting materials to board members 3-6 days in advance so they have time to adequately prepare and come with questions.
Your board needs to know how your business is performing, but also understand the high-level narrative of what’s happening in the business — where you’re going, why, what opportunities are ahead and what challenges are you facing. Don’t underestimate the power of storytelling at the board level.
Don’t underestimate the power of storytelling at the board level.
Board meetings can also be used as a catalyst to force thinking within the executive team. Shifting your mindset from “what do I need to present”, to “what do we need to accomplish”, will shape your board meetings to be about more than oversight and governance, and create a forum for exchanging ideas, recalibrating goals, and debating big decisions.
One way to ensure you get to those meaty discussions in board meetings is to communicate regularly with your members outside the formal meeting. Establish a cadence that works for you. It’s a smart investment of your time that will not only make conversations go more smoothly during the meeting, but also enrich your relationship with the board.
Navigating board conflict
Managing conflict and make-or-break decisions aren’t a matter of “if,” but “when”. The tough conversations are inevitable. Every sticky decision won’t be a matter of intensely polarizing opinions or full-contact conflict, sometimes the more challenging conversations come from lukewarm opinions or indecisiveness (especially behind the shield of a group call).
In either of these situations, it can help to speak with members individually before and after meetings to understand their perspective. Initiating 1:1 conversations with board members, asking pointed questions and listening deeply can give you a more complete picture to make a better decision. Getting a deeper understanding of people’s opinions or concerns may in some cases sway your original stance on a subject like a potential acquisition or expansion area. In other cases, it might cement your decision but give you context to getting detractors on board, or least comfortable with, moving forward.
Initiating 1:1 conversations with board members, asking pointed questions and listening deeply can give you a more complete picture to make a better decision.
Allison also suggests using your independent board members to help navigate these tricky conversations. Given their “neutrality” in the situation, they can be a very useful perspective across the board. Pun intended.
While we only scratched the surface of board best practices in this 45 minute webinar, the stories and tips Allison and Ryan shared provide some great food for thought for those looking to hone their skills in this area. Because there’s always room for improvement.