What is Board Management?
Board Management is how a company’s management team composes its Board, communicates with Board members and how the Board of Directors is governed. By following some best practices, relationships and interaction between a CEO or founder or senior management team and its Board of Directors can be optimized for maximum effectiveness.
Purpose of the Board of Directors
Companies and organizations are governed by a Board of Directors composed of members who periodically meet at a Board Meeting. The Board Meeting is where issues, solutions, and strategies are discussed for the benefit of the company. While rules, Board Meetings and Board Committees such as Audit Committees tend to dominate discussions about Board Management, there are other pro-active steps management teams, founders and entrepreneurs can take in managing their Boards. Key responsibilities of a Board include:
Oversee. Guide. Decide.
Deciding the big issues
The Board oversees the business for many processes and procedures around strategy, risk and exposure. It helps guide the management team and decides on corporate matters that cannot be delegated to lower-ranking officers.
Performance and Plan
Key Performance Indicators (KPIs) are the key drivers of a business. A Board will expect to review a dashboard of KPIs that can include Revenue, Sales Pipeline, Cash and other financial metrics such as Net Income and EBITDA.
Budgets & Priorities
Sell Products and Services
The Board will review and approve corporate budget ranging from capital expenditures to how many people to hire in your organization.
The Board will be involved in the selection — and sometimes dismissal — of key executives and officers.
Board Management Best Practices
Managing a board of directors can be a huge challenge even for experienced entrepreneurs. What do they expect for a meeting agenda? What should we pay our Board? Should we have independent Board members?
The preparation that is required to present your story in a concise and accurate fashion during a Board Meeting 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 our experience, 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 interactions — including meetings — a positive experience and leverage the valuable experiences of your board members to help you navigate the growth of your business.
Committees can be a divide-and-conquer mechanism to help with the workload of a Board. They can efficiently focus more deeply on issues and make recommendations to the larger Board.
There are varying thoughts about Board Committees. For a smaller and cohesive Board, they may not want committees at all, except for the formal governance requirements necessary for groups like the Audit Committee.
Other Boards may consider committees an essential component to how they are structured. Common Board Committees may include: Executive, Development, Nominating, and Governance committees.
Good committee practices, include:
- Clear Goals and Job Description as defined by bylaws
- Strong but inclusive Chairperson
- Committed Members who invest the requisite time to be effective
- Clear evaluation process and decision making criteria.