Do you avoid your board of directors, or are board members central to your business strategy? Find out if it’s time to shake things up in your boardroom.
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Do you view your board of directors as an important asset or more of an intrusive administrative liability?
How you answer that question is actually a powerful indicator of your business’s chances of thriving during these tough economic times.
As the recession lumbers on and small businesses continue to stall due to lack of financing, new customers or fresh products, I’m spending more time asking founding entrepreneurs about the inner workings of their board of directors.
Interestingly, I’m more hopeful about companies succeeding at turning around unprofitable operations when the founding entrepreneurs proactively increase (rather than lessen) their board-member engagement. This attitude is not intuitive, however, because most ego-sensitive entrepreneurs would rather not shine more attention on a business (and executive management team) that isn’t performing according to plan.
But I believe upgrading a company’s board of directors is one of the most overlooked action steps for turning around a troubled business. Upgrading boards can also help companies raise capital or pursue super-ambitious new plans for growth.
How do you know if you aren’t getting the highest possible benefit from your current board of directors? Here’s my checklist of what you don’t want:
- Your board meets in person less than three times a year.
- Your board consists primarily of friends, family members or long-term business colleagues.
- You communicate with your board only when you need a signed corporate resolution.
- You cringe when you get a phone call from a board member.
- You spend more time organizing dinners and entertainment for board get-togethers than business status presentations.
- No board member ever challenges your strategic thinking or helps you think more creatively about how to leverage your operating resources to increase revenue or valuation growth.
- No board member is actively working with you to organize a practical funding plan to match your next operating objectives.
- Your board was selected entirely by your existing investors.
- You don’t feel the need to tell the “real deal” about your company’s status to board members.
- You worry that changing your board composition might lessen your operating authority.
If any of these describe your relationship with your current board of directors, it’s time to re-evaluate.
After all, it’s common for companies to outgrow the skills, contact base and strategic wisdom of founding board members — but failing to acknowledge and act on that can hurt your business’s long-term growth potential. The best board members for a company have already “been there, done that.” They can advise entrepreneurs on the best shortcuts or shortcomings of new strategic initiatives. If your board members can’t make it easier for you to attain these next big initiatives, then consider making changes to your board.
That being said, getting more mileage out of a board of directors usually requires the founding entrepreneur to change his or her attitude, too. Companies that are losing money, market share, lending facilities and valued employees are already operating out of the entrepreneur’s control. So it isn’t a sign of failure to turn to your board for strategic insights that can save a floundering company — it’s your responsibility.
Board members who take their jobs seriously will work hard to get struggling companies moving forward again. It’s a matter of asking for help and then being willing to accept it when it’s given.
For more tips on how to choose valuable board members who will help to grow your business, read my previous article “How to Organize a High-Powered Board of Directors.”