For fiduciary boards, who are typically elected by the owners/shareholders, there should be specific terms, typically one to three years, a mandatory retirement age, and an annual performance review. Great boards usually consist of a majority of outside directors (non-employees) with perhaps one or two inside directors (who are also employees, such as the CEO, CFO). Advisory groups are much less formal and members often serve at the pleasure of the CEO.
Now, there is a cost to creating both groups, for things like compensation, travel, meeting time, preparation for meetings, including board books and minutes, compliance activities and filings, and director and officer liability insurance to protect members. One $300 million public company estimated that going public and establishing the required board of directors cost them over $5 million per year for these activities. Don’t worry, a smaller privately-held company should spend far less.
CREATE YOUR BOARD FOR THE RIGHT REASONS
Too frequently, owners/CEOs form boards for the wrong reasons. Encouraged by their CPA or legal counsel that they should have a board of directors, they proceed, only to wish they hadn’t as they realize the implications. One owner/CEO I know started his board and then chafed at the decision-making power he had given up. He finally chose to disband the board because he didn’t like having to work in tandem with it. This not only wasted a lot of time and money, but caused significant friction between him and the members for over a year.
Consider the return on investment (ROI). From an advisory group, there should be new business opportunities and relationships that help an entrepreneur break into new markets, gain customers and broaden their network. Performance is fairly easy to measure and can be objective; for example, “Acquire 5 new clients in year 1”. For fiduciary boards, you’re paying for experience and knowledge in areas that may be unfamiliar to a CEO that could result in revenue growth, cost avoidance, leader development and retention, strategic planning, and more. (Think Target and cybersecurity expertise.)
Boards can be a great help to a CEO if assembled for the right reasons, with the right charter and governance, and with the right mix of experienced members. If you’re unsure, start with an advisory group. This can help you decide whether or not to form a fiduciary board of directors. In either case, make sure you clearly understand what you are getting and how it will change the way you will operate compared to when you were a pure owner/CEO.
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
