The world in 2023 is, as much as any time in modern history, full of unforeseen or unknown risks and opportunities for the business owner. Engaging an independent board member or members can provide you with experience and alternate perspectives and enable you to, optimally, pre-empt or otherwise navigate the murky waters ahead. Get the right talent into the business and you could thrive, get it wrong and you might flounder.
The overall purpose of a board is to support the management team in guiding the business forward, offering support and representing the interests of investors and other stakeholders. One comment from owner managers we hear frequently at Polestar is the benefit of a sounding board for new ideas and fresh perspectives. Independents can also help to expand your network and give you access to other organisations, whether for external advice or funding.
Crucially, the independent board member is in a unique position – they look at the company from a different viewpoint, which is particularly useful when it comes to things like corporate governance. For high-growth businesses, a board member can take on responsibility for the strategic direction of the company, shouldering some of the burden that many small business CEOs struggle with when they are trying to balance day-to-day operations and business strategy.
What does a good board look like?
A good board is all about finding the right people that can bring something new to the table. Each business will have specific needs and finding the right people that work for your business is worth taking the time over, as they’re likely to be a big part of your journey to growth.
But how do you know who is right to join you in this trusted role?
Cate Poulson, head of the talent network at BGF, says a good cultural fit is as important as bringing in people with extensive knowledge. While they don’t have to join you in wearing jeans and trainers to the office, board members that understand the culture and vision that you’ve set for the business and appreciate what you’re trying to achieve will add much more value than those who are just experts on paper.
She adds that you should also consider board members who have been there before, people that know what it takes to grow a business effectively and sustainably and can support CEOs and management teams in executing the business strategy while keeping the company on track. By including members with extensive experience in growing and running successful businesses, you are making sure the strategic direction of your business is future-focused – if you can find that talent in the relevant sector or market, even better.
How do you sustain an effective board?
Once you’ve chosen the right people to support you in driving your business forward, the next step is finding ways to work together. Everyone has a role and must communicate with and trust each other to foster and sustain healthy and effective relationships. Top of the list is being united behind a clear vision, which will help to focus debate and discussion and have tangible measures to hold yourselves accountable. In this way, discussions will result in creative thinking and problem-solving, where everyone feels able to contribute their opinions and be listened to and respected with no one individual or opinion dominating unchallenged.
As the CEO, while having the right people in place can add significant benefits to your bottom line, it’s a two-way street, as they need to be given the information and autonomy to do their jobs successfully. Therefore, effective decision-making with your board requires you to:
By doing this you will manage everyone’s expectations, hold each other accountable, and make sure all decisions are being made fairly and with the Company at front of mind.
In today’s business world, with corporate governance, sustainability, diversity, and recruitment talent – all serious and prevalent challenges – there is a lot to handle for those looking to scale up. A board with the right people in place will play a significant role in supporting the founder-CEO and management team on their growth journey, and help you really reach your potential.
Three steps to an effective board:
So, to round up what we’ve learnt:
1. Consider your existing skillset, and recruit to fill the gaps – while a genuine passion for what you’re doing is key, bringing in those with similar skills or those without a growth mindset won’t help you in the long run.
2. Use your networks and take recommendations from contacts you know to find individuals who have experience.
3. Create trusting relationships with your board and give them the autonomy to genuinely support you and your business’ growth.
Your next step?
We at Polestar strongly advocate independent directors and quality executive directors – even for the most closely held family businesses. They provide balance to the owner, offer a supporting hand to shareholders and can sometimes give the unpalatable advice that management may not feel empowered to vocalise.
If you plan to buy a business, exit or raise cash, they provide clarity and experience to sit alongside your enthusiasm. We are more than happy to introduce you to potential candidates and, on occasion, have taken the role ourselves.
A board with the right people in place, will play a significant role in supporting the founder CEO and management team on their growth journey, and help you really reach your potential