A board of directors is not a ‘one size fits all’ thing. Every business depending on the size and interests has specific needs when it comes to setting up a board. The first question is what is a board of directors and what role do they play in a business or in a corporation?
A board of directors, simply put, is a group of qualified directors put together by administration of a business or corporation to collectively direct the company’s affairs towards prosperity. A board of directors is a recognized group of people who jointly oversee the activities of an organization. They are elected to act as representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues.
The important role played by a company or business’ board of directors is such that requires utmost care and wisdom when selecting people to have a seat on the board. How do you choose a board of directors? What steps should you take?
As stated earlier, there is no ‘one size fits all’ when it comes to a board of directors. This is why you ought to determine the kind of board your corporation needs. This will mostly depend on the size of the organization, area of expertise, number of stockholders and other factors that matter. You also need to determine the number of people that should be seated on your board. Regardless of the number of directors you choose on board, you need to make sure it’s an odd number. This eliminates chances of having a tie when it comes to decision making.
The minimum number for a board is 5 so make up your mind based on the size of your organization. Keep in mind that too many board members could be chaotic. Make a list of roles each board member should play. When you have a vague idea what roles you need to fill, it gives an idea who to look for. If you have an accountant on your list it makes it easier to streamline your choices. At this point you can create a list of nominees who you think will suitably fill up all the roles you listed. This list gives you an open forum to pick the best of the best options.
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What should your board of directors look like?
- Your board should of a necessity seat people of integrity, zeal and ability. For most Start-ups, the difference between them and their competitors is the quality of the board.
- Your board must have people of varying inflience. In Nigeria, this is highly imperative especially if you want to open doors and break barriers. Connections matters a lot in this clime and an influential board makes this happen.
- Adequate skills and experience is a given. It’s important to have people with skills and experience as they have the added advantage of their own network. A board of directors is not a platform for on the job training.
- There should be enough flexibility in that no one is glued to his or her seat on the board. You should be able to unseat members when they fail to appropriately carry out their duties. It could also be necessary for some people to step down when the board is getting over crowded hence no member should be indispensable.
- All members must have been thoroughly screened. A total background check should be conducted. People who have worked with them before are a good source of information.
- There should be the right amount of diversity. Don’t pack your board full with people of the same skills. There should be people with different outlooks on the business. You can’t have a board filled with electricians because you run an electrical company. There should be room for accountants, lawyers, marketers, and people from fields that would positively influence the company’s growth.
- Passive people have no place on the board. People that just take anything they are fed. Some people simply try to avoid conflicts and would rather sit on the fence. You need strongly opinionated people who are not afraid to voice their opinions; people who are not afraid to challenge you (within reason).
- All members of your board should have a clear definition of the roles they are expected to play and the extent of their authority in the company’s operations.
The bottom line is to pair up with people who possess knowledge and expertise which you don’t; a group of people, who would be willing and able to identify the company’s challenges and proffer solutions, identify great opportunities and encourage investment, and drive strategy.