In this blog we will answer how to have the best boards. And the quick answer this question, without any delay, is, quite simply, to have the best talent on your board. Period.
Who we want on our boards are people who are smart, positive, committed to achieving the overall goals of the company and are willing to roll up their sleeves to make things happen. Who we do not want are skeptics, nay sayers or, for even that matter, yay sayers with all that we are trying to accomplish.
We want board members who will bring to the table a diversity of experiences and skill sets which are relevant to our current business’s needs (because we desire guidance in unfamiliar territories). Therefore we should want board members who will bring to us a track record of success in areas we are not as knowledgeable about. Grey hair is not a prerequisite – experience is.
Said another way, we want board members who are smarter than us in certain areas and we desire diversity – thus we should not have a board made up of members all from the same background.
The best boards have the best talent. And, the best way to obtain the best talent is to have a board development process that is similar to the process we have in place for hiring and developing the best employees (a.k.a. talent acquisition system).
The best boards have a well thought out process to attract, hire, on-board, develop, measure, reward and performance manage board members. The best boards have continuity, progression and succession plans built into their process. On one hand a change in board members is healthy however, on the other hand, a revolving door (or constant turnover) of board members is not.
The best boards have some vested stake in the game (e.g., compensation, shares, etc.) yet balanced so there are no conflicts of interest. Furthermore, the best boards, by design, usually do not have control over operations. That is best left to the leader’s responsibility. It is up to the business leader to take the counsel of the board under serious consideration and then decide how best to execute, or not, their recommendations. The leader needs to retain responsibility and the accountability for the overall business’s results.
The best companies also indemnify their board members so their board members may freely share of their experience without the fear of liability of some action against them. The indemnity language is usually backed up by a supplemental D & O (Directors and Officers) insurance policy. Providing indemnity language and D&O insurance is a common best practice.
In order to have the best boards the best companies put in place the best processes to attract, develop, reward and protect the best board members.
Stoke your board by having the best talent on board.