Board Management – Part 1 – Time to Get Serious About Board Management
So you’ve finally raised some money and now your new institutional investors have told you that your Uncle Rich and your childhood friend, Jason, must give up their board seats to allow investor representatives to join the board. No more Friday afternoon board meetings over drinks at the local pub. The new board has scheduled 6 meetings for the next year and reserved 5 hours (5 hours!) for each meeting.
This is the first article in a 5-part Series on Board Management
Managing a board of directors can be a huge challenge even for experienced entrepreneurs. What do they expect for an agenda? Who should participate? The preparation that is required to present your story in a concise and accurate fashion can take days of time from you and your team. And just when you get through one meeting, it can feel as though you must start preparing for the next. Many entrepreneurs complain of the endless cycle of preparing for board meetings. And in my experience, having worked with some 40 different companies over the years, most entrepreneurs view board meetings as a necessary evil and something to manage away.
It doesn’t have to be that way. By following a few basic principles and avoiding some of the more common mistakes, you can make board meetings a positive experience and leverage the valuable experiences of your board members to help you navigate the growth of your business.
Some things to do:
- Do get to know your individual board members. Spend some time with them outside of official meetings and ask them what their expectations are for board meetings.
- Do control the agenda. Enable others to provide input, but structure the agenda to achieve your goals. If the sales pipeline is your primary concern, make sure you have organized your presentation to enable you to cover the issues you want to cover and to agree on a plan.
- Do invite your management team to participate. Have the leaders of finance, sales, marketing and operations lead the discussions regarding their areas of responsibility. Emphasize the strength of your team and enable them to be part of the planning process with your board.
- Do provide your board with the materials a few days in advance of the meeting (one week is ideal). Let your board members know that they will be expected to have reviewed the material so you can spend the time discussing important issues and not presenting the basic material.
- Do bring in an independent board member as soon as possible who is neither a part of your team nor an investor. Independents can be an invaluable source of industry knowledge, but perhaps more importantly, can inject some much-needed objectivity into an environment that can become insulated. There is usually a cost to bringing on non-investor board members, but the potential benefits far outweigh those costs.
Some things not to do:
- Don’t let discussions drag on (and on). Keep things moving to remain on your agenda and make it clear when a decision has been made or when you have adequate input to make a decision. Too often, a board meeting can devolve into side discussions as members try to outdo each other with stories that are important to them or that demonstrate their knowledge, but do little to help you run your company.
- Don’t underestimate the importance of your presentation materials. While it can seem that board meetings keep you trapped in an endless cycle of presentations, if done properly, these are the exercises you should be doing routinely as a way of managing operations, fundraising or engaging in an M&A discussion. Be sure to clearly identify the metrics that you think tell the story and work with your team to refine them and ensure their accuracy.
- Don’t schedule too many meetings. The ideal board schedule is 4 in-person meetings per year with 1 or 2 additional phone calls to do a deep dive on a specific subject (new product launch or your marketing campaign for example). Try to resist calls for more frequent meetings, but some boards, especially those for relatively new companies or those with an inexperienced management team, will demand monthly meetings. You can live with this for a year or so, but after proving that you have control of the topics and agendas, advocate to reduce the number of meetings.
- Don’t underestimate the power of your board. They are your direct boss and you need to treat them with respect and respond to their queries and advice. As with managing your staff, it is important to set goals, review progress and alter your strategy if the circumstances dictate.
Overall, an effective board can mean the difference between an ordinary company and a great one by providing important subject matter expertise as well as deep industry experience. Board members should respect one another and be willing to ask tough questions, but also be willing to invest the time to assist the company with introductions or coaching. Managing a strong, effective board will inevitably make you a better manager and improve your company’s chances of success.
Chris Thomajan is TechCXO’s Managing Partner – Boston. See his full bio and contact information here.