Not every board is created equal.
Boards of directors and advisory boards can play a valuable role in helping companies make strategic decisions. However, not all boards are created equal.
The structure, composition, and process of a board can have a significant impact on its effectiveness and impact. In family businesses and family offices, advisory boards can be particularly valuable.
Family businesses often face unique challenges, such as balancing family dynamics with business decisions, and navigating succession planning. Advisory boards can provide valuable guidance and expertise to help family businesses address these challenges.
In medium to large non-listed companies, boards of directors can play a critical role in providing oversight and guidance to the management team. These boards may include representatives from the company's management team, as well as independent directors with expertise in relevant areas. In order to be effective, these boards should have clear objectives and a well-defined process for decision-making.
Listed companies, particularly those subject to regulatory requirements, may have more complex board structures. These boards may include independent directors, representatives from major shareholders, and other stakeholders.
The board's composition should be designed to ensure that it has the necessary expertise and diversity to make informed decisions.
Advisory boards can be useful in a variety of company contexts, including family businesses, family offices, medium to large non-listed companies, and listed companies. Advisory boards can provide guidance and expertise in specific areas, or can provide a diversity of perspectives on a company's operations or industry.
Hybrid boards can be useful for companies that want to ensure that the board has a diverse range of perspectives, or that want to give a formal role to non-voting advisors. In all cases, it's important to ensure that the advisory or non-voting members of the board are well-qualified and engaged, and that the board has clear expectations for their role.
By considering the goals and needs of the company, and carefully designing the board structure, composition, and process, companies can create high-impact boards that contribute to their success.
Here are some tips for building a high-impact board:
Define clear objectives: Before building your board, define what you want to achieve through your board's work. This will help you identify the structure, composition and processes that will make your board most impactful.
Consider diversity: A diverse board can bring a variety of perspectives and insights to the table. Consider diversity in terms of gender, race, age, expertise, and background.
Choose members carefully: Look for board members with experience in your industry, relevant functional expertise, and a track record of professional success. Don’t only consider candidates who have experience serving on other boards.
Set expectations: Clearly communicate your expectations for board members, including their role in decision-making, time commitment, and level of engagement.
Establish a clear process: Develop a process for board meetings that includes an agenda, pre-meeting materials, and a post-meeting follow-up. This will help ensure that board meetings are productive and that decisions are made efficiently.
Evaluation: evaluate each and every meeting. Understanding what worked and what didn’t in one meeting - and acting on that understanding - will help make the next meeting more impactful. Periodically - once every one or two years, depending on the pace of change in your organization - evaluate your board starting with the objectives, to make sure its structure, composition and processes remain aligned to those of the company.
By following these tips and tailoring your approach to your company's specific needs and context, you can build - and maintain – a high-impact board that helps drive your company towards success.