How to Form a Board of Directors: Entrepreneurs who want to take their business to the next level may eventually come to the conclusion that they need a board of directors. But what does it take to form an effective one? Here are top 10 tips for recruiting and retaining a board: 1. Use a crystal ball: Think long term and recruit directors who can govern the company you aspire to grow into rather than the small business you might be now. 2. Find a go-to guy or gal: Have at least one director who understands boards and governance. Don’t rely solely on the lawyers and accountants to have governance skills. 3. Create job descriptions: Establish a clear job definition for directors (executive and non-executive) and define the role the board will play in strategy, risk management, etc. 4. No playing favorites: Insist that all directors recognize their duty to the company as a whole (or all of the shareholders) rather than play a limited role of safeguarding the interests of one shareholder — even if it’s your biggest investor. 5. Include a variety of flavors: Build a team that possesses a range of skills and diverse backgrounds in order to get different perspectives on each strategic discussion. 6. ‘Yes Men’ (or Women) need not apply: Select directors who would quit the board if they disagreed with a course of action you were taking. 7. Lean toward like-mindedness: Seek consensus on all decisions, not majority voting, and be sure that all directors know how to assess issues from the perspective of the stakeholders and what is right for the company. 8. Draw that imaginary line: Be clear about the differing roles of the chairman and CEO/MD — and don’t try to combine them in one person. 9. Remuneration requires research: Pay a fair and responsible equivalent, and seek expert advice if you need it. 10. Boardroom hierarchy: Remember that the CEO/MD reports to the board; be ready for a challenge and embrace the collective wisdom and enhanced discipline. Thank you have a great weekend!
Posted on: Sat, 16 Aug 2014 08:19:41 +0000