One of the toughest challenges private company management teams face is building their first board.
An engaged and effective board of directors can add a huge amount of value, create a competitive advantage and help a company flourish. How, though, do you go about assembling a qualified team of outside directors, and what should you expect along the way? We’ve broken down the process into three crucial steps to jump-start your board member recruitment campaign.
Know Your Needs
Before you commence the recruitment process, prioritise three key criteria:
A recent Deloitte report on private company governance noted “a key benefit of having independent board members is their different and diverse perspectives.” Many private companies recruit candidates from multiple industries both to broaden board perspective and to help identify opportunities for expansion. Look for individuals with experience that includes mergers and acquisitions, marketing and sales, finance and law.
But as you look for the right candidates, watch out for the wrong ones, too. Tech innovation resource VentureBeat names appointing the wrong people to the board as a top mistake made by start-ups. According to VentureBeat, businesses should “carefully consider board nominees and ask for feedback from people who have worked with them,” as well as appoint at least one director who is “loyal to the company only.” This allows companies to avoid saddling themselves with “dysfunctional board members” who fail to offer value and may even get in the way of positive progress.
While it’s tempting to seek out candidates who serve your current needs, consider what your company will require in the years to come. Author and corporate governance expert Julie Garland McLellan told Entrepreneur that businesses should “use a crystal ball.” She notes that while you may be small now, directors should be prepared to govern the company you hope to become. Think long term and plan ahead.
Give and Take
Once you have a staffing strategy in place, it’s time to get to know your candidates. Suss out potential conflicts of interest, gauge their compatibility with your company, determine what each potential director stands to gain from serving on your board and ask what they hope to achieve.
Understanding your candidates’ motivation will allow you to determine the degree to which you’ll need to set their expectations — a must when building a functional board. The non-profit Robin Hood Foundation‘s governance and board placement team advises companies to create a board prospectus to “facilitate necessary — and sometimes awkward — conversations about time and financial commitments.” Serving on a board is typically a multi-year effort that involves a considerable amount of time, energy and travel. While some of this can be mitigated with tools like a board portal that simplifies board-related activities, candidates should still be made aware of their responsibilities and the required level of engagement.
Deloitte recommends that businesses evaluate their board members every year “to ensure that they continue to meet expectations,” so be sure to inform your candidates of this aspect of the job. You’ll also need to educate them about your company by providing non-public data like strategic objectives, financial statements and organisational charts. While experts from the Private Company Investor trade publication say there’s little precedent for what information to provide, and when, putting yourself in the candidates’ shoes and asking what you would want to know yourself is a good place to start.
Immerse Your New Board in Your Business
When the screening phase of the recruitment process is complete, it’s time to immerse your new board members in your company’s world. Pull back the curtain as you would for a new staff member so that directors can familiarise themselves with company culture. The Robin Hood Foundation recommends a “robust orientation process” to get new directors active fast, and highlights the importance of providing a detailed company overview in-person. Guiding new board members through the board handbook is another way to get them up to speed while also building loyalty and trust. Your board’s success will depend on its commitment to your company, and witnessing the business’s inner workings firsthand can strengthen a director’s devotion.
Board Portal Buyer’s Guide
With the right Board Portal software, a board can improve corporate governance and efficiency while collaborating in a secure environment. With lots of board portal vendors to choose from, the whitepaper contains the most important questions to ask during your search, divided into five essential categories.
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