In recently working as an advisor to a closely-held private company looking to redefine strategies for growth and execution, discussion necessarily turned to the company’s Board—in this case an advisory board, but one more in name only. The company’s CEO seemed to be proud of the fact that he had heeded past advice and formed an advisory board for his company. But to what end?
On the company’s advisory board was the CEO himself, three key executives, the company’s attorney and a friend of the CEO who heads a company that is a principal supplier. By then, the advisory board had met on four occasions, each several months apart. No formal schedule for future meetings had been set. No structure had been agreed upon. No roles, responsibilities, expectations were ever discussed. Minimal materials were distributed in advance of meetings held. Still, the CEO believed he had an advisory board because “we could get together to talk.”
Again, to what end?
In this particular case, the phrase “Talk’s Cheep” fits. There was limited investment in this advisory board. By compiling an advisory board comprised of company executives who may not have felt totally free to share their thoughts and criticisms in such a public forum, an attorney whose advice could be solicited at any time as part of his firm’s representation of the company and a supplier interested in protecting his company’s relationship, the CEO was coming close to wasting his and everyone else’s time. He acknowledged that he enjoyed talking about some issues that he faced, but also allowed that meetings gravitated to being as much social as anything else.
Unfortunately, this is NOT an isolated situation. To have a board, whether advisory or statutory, requires on-going commitment and follow-through at the very least. A CEO should not try to launch a board if he, and through him, his company are not fully committed to doing all that is reasonably needed and advisable to make it productive and valuable for the long-term. To start, this requires a written charter that sets out the board’s purpose, composition, governance guidelines, membership criteria, compensation and duties and responsibilities of the advisors or directors. It also requires the willingness to bring on individuals who can contribute needed expertise and insights to make discussions meaningful. Not to be overlooked is that advisors and directors, especially outside independent members who stand to contribute significantly, will require evidence of such commitment and follow-through before agreeing to sign-on. They will want to know that their contributions will be heard and valued.
So, why do many CEO’s hold back? Sometimes it’s as simple as they aren’t willing to openly share information and concerns and be open to advice and counsel from others. Still, even if they sign on to the idea of a board, why do they so often take seemingly half-hearted approaches to forming boards by surrounding themselves with insiders and related individuals, whether family or those doing business with the company?
Strange as it may seem, in such situations I often hear “who’d ever want to be on my board?” Sometimes the view is that the company isn’t large enough or profitable enough to entice quality board members. Or, that the company just isn’t ready in its life cycle quite yet to attract such outside talent. For whatever the reason, too often the CEO just settles. But, rarely, if ever, is this statement true! There is usually a large pool of available individuals who are anxious to devote their time and skills to such boards. Among them may be retired CEO’s or CFO’s, current board members for other companies, senior executive seeking to broaden their business experiences, even family business advisors. What matters is that many potentially qualified individuals would want to serve, want to give back. The CEO just needs to find them.
How? Talk with the company’s banker, accountant and attorney as a start. They may be working with clients having boards and may have observed some good candidates. Contact CEO forum groups or university-sponsored family business programs. Search out executive search firms having practices specializing in board recruitment and online social networking sites like LinkedIn and BoardProspects. Also, consider contacting and even becoming a member of the Private Directors Association (www.privatedirectorsassociation.org), an excellent Chicago-based and regionally-expanding member organization providing a network to connect potential board members and private companies and helping create value by supporting excellent practices in board governance.
CEO’s should not fall into the trap of thinking small. If they want a board and are truly committed to its success long-term, there are many qualified candidates to be found who will want to join with them in achieving their goals.
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