Board members play very important roles in guiding and providing governance for companies, so it’s important to recruit individuals who will effectively steer the ship, so to speak. In public companies, which by law must have directors, the board comprises an elected group of individuals representing shareholders. They meet regularly to set policies for corporate management and oversight.
Boards aren’t limited to the corporate world; many private and nonprofit organizations have them as well. In addition to providing top-level leadership, checks, and balances, they often take active roles in such areas as fundraising and keeping the organization focused on its mission. Boards can also be valuable to startups. In many cases, their members have a depth of knowledge and experience from which the founder or CEO of the venture can benefit as he or she launches and grows the company.
“Just like the number of business opportunities available today has never been greater, so have the challenges of running your business successfully and profitably,” writes Yazad Patel, CEO at BoardTitans. “Companies, despite their best efforts, sometimes end up making the wrong decisions. Not having a Board of Directors is one such mistake.”
One of the challenges in pursuing the need for governance and building a board is finding the right individuals. Depending on the organization, a board could be composed of accomplished business leaders, influential members of the local community, people in your industry who know the lay of the land, and others.
From the candidate’s perspective, a potential director is likely to ask whether a specific board engagement is in an industry that’s of interest to him or her. For example, G. Scott Paterson, a longtime Toronto business leader, technology venture capitalist and co-founder of FutureVault, a document-sharing company headquartered in his hometown, serves on several boards including those for Symbility Solutions, Engagement Labs and The QYOU.
So how do you find these people? Well, according to many business leaders it takes time, tenacity and good judgment. You also don’t want to recruit a group of people who are likely to think the same way or bring similar backgrounds and experiences. This is where diversity is very important. If you’ve served on a board, you’re familiar with how different people view issues and opportunities with a variety of perspectives.
According to Mark Rogers, CEO, and founder of BoardProspects, “Many private companies tend to recruit their board members from a pool of friends, family, and professional networks or via word-of-mouth. But when it comes to board membership, only those best suited to the role can truly represent the interests of the corporation and its stakeholders, while allowing for effective execution of corporate governance and objective oversight.”
One of the things you’ll want to do in building your board is having a clear understanding of exactly what’s needed. Determine what types of knowledge and expertise are required, then begin identifying potential candidates. It also helps to ask yourself the question “What’s in it for them.” In other words, why would Company X CEO want to be a board member at your company? Sure, you know he or she can provide lots of wisdom and insight, but how will that person benefit as well?”
“When recruiting an employee,” writes Firas Raouf, co-founder, and general partner at Companyon, an early-stage VC firm, “it’s pretty obvious that it’s a full-time role. But when recruiting a board member, setting your expectations on the time and energy commitment expected in the role is key. There are many people out there who get on boards, but have no time for it, or don’t prioritize the role high enough. You also need to be realistic in your expectations.”
Most executives agree that boards are important, but they take time and lots of due diligence to build. Ask yourself if your company needs one. If you do, assemble it carefully, and with a purpose.