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How to recruit a Board of Directors
While the “owners” of public companies often get to pick their board members more in theory than in practice, owners of private companies get to pick both their investors and their board members. Choosing partners who best fit over the long term requires as much rigor and thoughtfulness as any decision an entrepreneur makes.
Many small private companies have no or underdeveloped boards. We encourage all our portfolio companies to build great boards and then use them constantly. Entrepreneurs are almost always surprised how much value a good board can bring to their companies, and the best boards are a function of both the quality of the people involved and, just as importantly, how they operate.
Here we share two recent items on the subject of board recruitment – one that deals with the topic in broad terms and one that looks specifically at recruiting “digital” directors.
In Recruiting the Digital Director, Julie Hembrock Daum, Greg Sedlock and Dana Wade of Spencer Stuart discuss the implications social media’s growth has for the recruiting process. Demand for digital expertise at the board level is rising faster than the supply of qualified candidates, who can come from nontraditional backgrounds. Boards may have to recalibrate their perceptions about what an ideal director looks like, define what digital means for the company, and understand the talent trade-offs:
Recruiting board directors from the digital, consumer Internet or technology fields may mean compromising on conventional benchmarks, such as prior board experience or international expertise, in favor of more contemporary skill-sets, for example, experience with social media platforms or digital advertising. Additionally, boards should understand that directors with digital expertise may not have achieved the same stature as candidates from more traditional fields; many of these candidates have not reached the C-level, for example. These young, ambitious and, oftentimes, time-starved executives can be more transient than more established executives, and they may be less familiar with the customs of a corporate boardroom.
Several questions during the recruiting process must be explored. Is public or private experience critical? How relevant is governance expertise? What core competencies does the board require? Are they seeking broad experience or something specific to a hot technology of the day? And then, once recruited, the new director must be positioned for success:
(C)arefully define the role that the new director is expected to play on the board. Is the new director expected to contribute in the same manner as other directors, or is there a digital-specific function he or she is expected to fill? Is the new director expected to chair a committee? Answering these questions is important when recruiting any new director, but especially [for digital directors].
Firas Raouf of OpenView Partners makes parallel recommendations, with a broader view, in How to Recruit a Board of Directors:
Recruiting a board starts by you realizing that you should recruit a board the way you would recruit employees. Start by defining your needs. One approach is to examine your skill sets as a founder/CEO… Then think about the skill sets you lack and where a mentor could help in the role of a board member… Then think about your plans for growing the company and the role of a board member in opening strategic partnership doors, whether for funding or business development.
Rauof also describes a few symptoms associated with a bad board:
- The CEO frequently laments that board meetings take up too much of time for the value added
- The CEO feels the urge to hide things from them, and/or doesn’t think they’d understand the business
- Members spend too much time between projects. When you run out of things for them to do, it’s time to recruit their replacements.
Most founders/CEOs think that a board is something that creates a lot of unnecessary work for them, adds little value, and is manned by individuals who will get in the way of running the company. That can be true if you recruit bad board members. But if you recruit great board members, you will get great value.