1. Understand boundaries and define roles. The best board operates under the philosophy that they are not in charge of day-to-day execution, but are advisors with valuable big-picture expertise. Boards need to trust the CEO to make smart decisions under their guidance, even if the advice is not always followed. When Boards do not govern, but start to micromanage, conflict is created.
2. Use Your board of directors as a sounding board. Adam Epstein writes in The Perfect Corporate Board: “The vast majority of small-cap directors are not only intelligent, successful, and dedicated, but they also spend considerable amounts of time for not a lot of money trying to do their best to advance shareholder value.” Therefore, executives need to surround themselves with advisors who bring expertise where the executive has gaps or low bandwidth. I have found that consulting with a well-assembled, diverse board can decrease the need for outside vendors/consultants who may not have the company’s interests as their number-one priority.
3. Make use of their Rolodex. CEOs want to grow their business. Who better to call upon than the board of directors? Know who to go to on your board for advice and make use of them! The Alexium board has been instrumental in generating new business leads that have resulted in new revenue streams and verticals for the company.
4. Corporations are dynamic entities requiring boards with flexibility, skill and open minds. Faced with new challenges daily, CEOs have a fiduciary responsibility to work with their board for the benefit of shareholders. Keeping in mind that CEOs manage dynamic organizations, today’s priorities may differ significantly from tomorrow’s. Plan ahead for success and failure, and make sure the board has the flexibility and skills to adapt. As your company grows, you may need additional board members to fulfill different requirements, including listing on national exchanges.
5. Maintain a close relationship between the chairman and CEO. Many chairman act as a mentor and coach, helping CEOs improve their overall management style. They should also respect a CEO’s autonomy to make good choices and run an effective business. An effective relationship between the chairman and CEO builds an effective and progressive company. Without that, companies are stalled by progress and riddled with overly political complications.
Overall, boards should be regularly evaluated to ensure they are optimally positioned to bring your company future forward for the long-term.