Managing your board effectively can be a difficult art – particularly when you have so many other responsibilities to juggle! Unfortunately the consequences of getting it wrong can be severe, from fall outs with investors to founding teams being forced out of their own companies, making it important you take the time to make sure you are set up for success.
Your board has two main functions – oversight and strategic planning. This makes them responsible for a range of duties within the business. The board provides direction and sets business strategy as well as making major business decisions; they act as fiduciaries protecting the business’s assets and the interest of the shareholders; they monitor performance; establish systems of governance and accountability; and recruit and supervise management and executives.
Some of these focuses are less important at the beginning, but as your board grows they will have to take on all these responsibilities. This makes it important that you set up good governance now, so the board can be prepared for elements such as the significant fiduciary responsibilities.
Particularly while you are still scaling, your board will probably be composed of the founding team, key investors, and a few non-executive directors. At this stage boards often grow quite organically to meet the needs of the business and the requirements of the investors. To make sure that the result is logical, well-structured and efficient, you will need to keep an eye on overall board composition and build in internal review structures. This will help you keep things productive – otherwise you might find yourself with an unwieldy or toxic structure which is more of a burden than a boon.
The board’s separation from the business serves a vital purpose, allowing them a more objective view of business strategy and allowing them to fulfill their fiduciary responsibilities. There is a high degree of correlation between more independent boards and higher performing companies.
So how can you get the most from your board?
Reporting is often a big strain on scaleups. A lot of businesses we have spoken to report taking up to a week out of business as usual every time they need to report to their board (and investors), causing significant strain.
While it’s important that you keep your board informed, this sort of disruption is to no-one’s benefit. With board meetings occurring anywhere between six and twelve times a year in most businesses, this can result in months of disruption if you are not careful.
To ensure you are spending your time where it can be most beneficial, not searching frantically through piles of paperwork, you should find a way to build data collection into the normal functioning of the business. If you can add finding and collating weekly figures into some kind of centralized database into the weekly duties of each department, you can significantly reduce the overall burden of reporting, in addition to ensuring a higher accuracy in the information.
There may be some variation in what kind of data will be required for each meeting, depending on the board agenda. However, establishing good housekeeping standards now will help in more than just meeting preparation and improve financial monitoring and risk analysis as well, making it well worth getting started.
Once you have your information in order, it is then good practice to circulate it to the board in advance of the meeting. This is generally referred to as a board book or board pack, and contains the basic financial overview, short operational reports, KPIs, and any other data that will be required to facilitate and illustrate planned discussion topics.
This gives board members time to look over the information before the meeting, cutting down on pointless rehashing and improving the value of their strategic analysis.
If you struggle to collect the right information, or have had problems establishing a proper system for storing it, there are plenty of software tools out there to make reporting easier and quicker. Some of these even have functions designed to help you manage the subsequent board meeting.
Once the board pack has gone round and everyone has had time to digest the contents, it’s time to reach out to each board member individually. If you are an early stage scaleup, this will probably be the responsibility of the CEO or founder, but at later stages this responsibility will be assumed by a chairperson instead.
It is important you have checked in with everyone individually, because while the board meeting serves its purpose, it is a poor venue for individuals to vent their concerns. Instead, this preparation allows you to gauge attitudes and discuss individual board member’s concerns without derailing a full meeting.
Certainly, if there are any potential concerns about business performance, you need to discuss it with your board members beforehand. Blindsiding them in meetings will only lead to raised tempers and strained management-board relationships.
Likewise, if a problem has come up, don’t wait till your next bi-monthly board meeting to let your board members know. Managing relationships when there are problems is no one’s favourite task, but your priority with the board should always be to maintain their trust, and the best way to achieve this is by honesty. You don’t want to put on a front and hide the problem until it is of an unmanageable size or you end up in the news. By keeping the board in the loop when things are difficult you can also take advantage of their brains for strategy and problem-solving, where an uninformed board might just present another obstacle.
Even if all the news is fantastic, getting gut reactions out of the way and providing an opportunity for individual discussion beforehand will really help you keep to your schedule in the proper board meeting – so you can get to the points you really wanted to discuss. Ultimately you get a relatively short window to talk to your whole board, so if you want to get to the meat of your business strategy, you can’t let less important issues take up too much of your time.
The first step to a well-run meeting is always planning. Chaotic meetings can often be laid at the feet of a failure to properly execute the last two sections. If you aren’t getting your reporting right, or haven’t been managing your relationships with board members, these will be the biggest barriers to a successful meeting.
The next big thing to get right is how long you will need. Your board members are busy people and you probably aren’t swimming in spare time either! Setting out a schedule and sticking to it is an easy way of keeping your board happy. Meetings that run over for hours tend to be less productive as people get stressed and disengaged. Instead, structure your meeting so that you are covering the most important topics first, and any over-running discussion can be pencilled in for the next month in the knowledge that you have covered the key points already. It’s also worth building in short breaks between agenda items, to keep everyone fresh.
You (and your investors!) probably have a clear idea of some topics that need to be covered in each meeting, but you should make sure that you have considered
If you are really struggling, you can find some great templates for breaking down a board agenda here. You can also find plenty of resources out there if you are having difficulty building and structuring your board deck. We like this one by seed and series A fund Creandum.
After the board meeting, you should follow up with deliverables and minutes in reasonably short order. This makes sure you are all on the same page about what was agreed, and gets everyone organised while the information is still fresh in their minds. If you are having any problems getting minutes out in reasonable time and detail, you should consider setting out a template for them based on the meeting agenda before the actual meeting. Then you can simply fill it out and make any amendments during the meeting.
Catch up your team on any relevant developments or initiatives. If you decided in the meeting that you wanted to discuss anything particular next time, you should also let the appropriate people know and make sure to add these bits to the data reporting now so you are prepared when you come to make the next board pack.
In a similar vein, if there were any issues with the whole process, now is a good time to review your procedures and board meeting. From deciding to try a new board deck agenda to keep discussion on track, to revisiting what data you are collecting, there’s a lot to experiment with.
For example, this tweet promotes one potential way of incentivising disengaged investors and board members:
Source: AriannaSimpson.eth, Twitter, 16 January 2022
There are a couple of topics that are trending in boardrooms at the moment.
Chances are, if your board members haven’t brought these things up already, you can expect questions on these topics before the year end, so best to get prepared now.
From COP26 to the increased investor interest in businesses with socially conscious outlooks, this is fast becoming a topic you can’t afford to ignore.
If you can preempt your board, and start thinking about this now, you will also get a jumpstart on the potential benefits. As of 2021, over a third of private capital assets globally are now being managed with non-financial goals such as climate and diversity in mind. With investor demand for ESG-friendly investments rising across the board, it is likely that these investment frameworks will continue to gain ground.
Asides from helping the planet, formalising your company’s environmental, social and governance policies can also help decision making; revitalize enthusiasm amongst your team; and help everything from your marketing to your hiring.
Want to know more? You can check out the report we co-authored with Beauhurst here.
We’ve spoken before on the importance of diversity in scaleups – and also on the importance of diversity on boards – but it is still a vital topic to consider.
We’ll cover board diversity below, but if you want to know about the myriad benefits of a diverse hiring policy on scaleup growth then you can check out our report here.
It is inevitable that at some point you’ll want to refresh your board. Some businesses do this regularly, to drive innovation and engagement. Others favour experience and will alter their board composition less frequently. However, it is something all businesses have to deal with occasionally so you’ll want to know how to go about it.
You may also need to replace individual board members who aren’t performing well, whose skills and expertise no longer match the needs of the company, or with whom you are having relationship issues. Being on the board of your business is a big responsibility, and it’s fair to replace people who aren’t providing as much help as your business needs
To make this easier, best practice is generally to institute an annual board review process. During this you evaluate the performance of board members individually and the overall board collectively, to make sure that the board and its members are still serving the needs of the business well.
You will also gain new board members as you run through additional funding rounds and grow naturally. With many big investors demanding board seats, dynamics can change quickly. As your business scales you will also need to find and onboard additional NEDs – making it all the more important that you have a regular opportunity and process to review the board as a whole.
Particularly if you are in the process of building or refreshing your board, you should seriously look at the range of people you are choosing. Beyond the most traditional markers of diversity – gender, race, socio-economic background etc. – it is also very valuable to consider whether you are being diverse in the professional background of your board members.
Every board needs its specialists in your business and industry, but there are plentiful benefits to be found in also including professionals from related industries and markets, who may be able to provide interesting perspectives and technical knowledge relevant to your business.
It’s also good to check those specialisms are wide-ranging and don’t overlap too much. A board of marketing experts will be at sea when discussing regulatory issues and product design, and if you all hail from product development you can expect a similarly myopic view on branding.
Board management is a big topic, and can be one of the biggest organizational hurdles between your business and true scale. But get it right and you’ll save yourself a lot of pain down the line.
If you are interested in learning more, you can check out the resources we collated while researching this article (below) or contact us for a chat. We are always happy to talk about scaling!
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