3 Keys to Making Your Board Effective

When I wrote my first article for Outlook Business, on why a board of advisors is important for start-ups, a couple of folks wrote to me asking about best to handle having a “wrong” board member. Jack and Suzy Welch have discussed this at some length in a BusinessWeek column of theirs.

I decided to added my two-cents to the discussion.

Photo: nateOne via Compfight

Photo: nateOne via Compfight

“Anybody can just ask questions! I bring up a problem because I need help. What’s the point of asking questions or giving a lecture without offering any help?” This lament came from a friend, who was VP-Engineering at a technology firm. He had just returned from a board meeting, where he had presented a paper on the development status of the company’s newest product, only to have a board member bombard him with questions. “And the chairman just sat silently.” My friend’s predicament reflects the question on the role of a good board member. As a reader recently posed: “What if you get the ‘wrong’ person on your board?”

Start-ups particularly, and entrepreneurial firms in general, can use the benevolent oversight of an experienced team that a good board of directors can be. If finding the right people for the board is an important task, getting an inappropriate or incompetent member off the board is even tougher. Therefore, one needs to have a clear understanding of who would be a good board member for a company.

Picking out a director is not always in one’s control, unlike hiring a key employee. Therefore, this should be treated with care and due diligence. Even if venture capitalists or bankers supporting a company want to have someone specific on the company’s board, or if a company or entrepreneur invites an eminent personality to the board, following some basic ground rules can help avoid problems that may arise later.

Expectation setting To start with, list down your expectations from an incoming board member. This can be specific, as in structuring employee shareholding or other equity matters, or be more generic, as in strategic review or industry networking. Meet the member outside, ideally prior to a board meeting, to comprehend and get acquainted with his motivations for being a board member.

Role setting At the meetings, designate clear roles, particularly that of a discussion leader, so that participation can be both balanced and, where needed, encouraged. Most importantly, run the meetings on the clock, hard as it will be, to prevent it being hijacked. At the end of each meeting, ensure feedback is captured and, later, circulated with the meeting minutes to keep board members informed and accountable.

Weeding non-performers Despite one’s best efforts, as in hiring, occasionally one runs into a poor fit with a board member. A typical board will rather avoid having to deal with a non-performing member than address what could be a potentially embarrassing and even painful process of persuading a non-performing director to leave. Often, board members tend to be seniors or retired executives, and this makes it difficult to pull up non-performing board members. In India, age and culture are further barriers to holding senior board members accountable. However, an entrepreneur rarely has the luxury of carrying the dead weight of a couple of bench warmers.

The best way to deal with this situation is directly, but subtly. Work with your Chairman, assuming he’s not the problem, and validate your concerns and perceptions. Sit down with the board member with whom you have issues and try to find common ground. Insist on the board assessing itself twice a year, ideally against benchmarks, so that any conversation with individual board members can be held in the context of the board’s own benchmarking data. Pose all challenges and concerns in the context of the company, and never make them personal. Finally, ensure that any solution is face-saving for the individual board member concerned, as you never know whom you might have to work with again.

This article first appeared in Outlook Business in November 2008.

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