As a startup gains traction and scales its operations, the role of the CEO and founder evolves from being a hands-on leader to a strategic visionary. One pivotal step in this evolution is the establishment of a formal board of directors, a process that requires careful consideration and planning.
Here, 19 Forbes Coaches Council members provide tips tailored to help CEOs of growing startups build a solid board of directors. The insights below offer a roadmap for navigating this vital phase of entrepreneurial development.
1. Identify Who You Are And What You Want
When I was asked to sit on the board of a private equity group, the interview questions centered around empathy, as it is an intangible leadership skill that ensures many other qualities are present. To build a formal board of directors, identify who you are and what you want, and create questions that ensure you get directors who are aligned with that vision. – Lisa Marie Platske, Upside Thinking, Inc.
2. Consult With A Business Lawyer
If you’re planning to build your first board of directors, then you need to engage the support of a business lawyer with experience in setting up corporate boards. The establishment of a board is not something a CEO should do by themselves. – John Knotts, Crosscutter Enterprises
3. Be Transparent About Members’ Responsibilities
Once the decision to create a formal board is made, it’s crucial to evaluate and document clear expectations for each board member regarding their time commitment and responsibilities related to operations, management, representation and leadership. This ensures transparency, accountability and a strong foundation for the board’s success. – Krumma Jónsdóttir, Positive Performances
4. Prepare To Be Challenged And Held Accountable
Are you prepared, as the founder and owner, to be challenged and outvoted in key strategic or fiscal decisions, and will you be willing to heed the board’s recommendation? A strong multidiscipline board will not only hold you accountable, but also provide insights into better ways to approach and grow your business that you may not have considered. – Sherre DeMao, BizGrowth Inc
5. Ensure Members Align In Vision, Mission And Values
First of all, make sure your board members share your and the company’s vision, mission and values. Having a board with diverse views and skills is valuable, but being aligned on strategy and goals is even more important. Also, board members need to be aligned among themselves and be good and organized communicators. Ideally, they will become your advisors and monitors. Have the bylaws ready. – Olga Kiendler, OK Transformation
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6. Choose Members Who Bring Unique Contributions
The board needs to be a diverse group. Members must bring unique contributions. Have one member with expertise that is essential to your industry and one who is a consummate networker with access to many influential contacts. Also, choose one member who is a thought leader, ready to give vital feedback and be willing to speak up in opposition to the majority. – Rick Itzkowich, Vistage Worldwide, Inc.
7. Seek Out Individuals Who Are Supportive And Mature
Seek diversity of perspective, and look for those who are passionately supportive of your enterprise. It is useful if they are mentally and emotionally mature so that meetings and conversations are constructive. Of course, the table stakes are that they have calm business acumen and experience. – Lisa Hale, Focused Leadership Consulting
8. Prioritize Divergent Voices And Contributions
One essential tip for a CEO and founder of a growing startup considering building a formal board of directors is to prioritize divergent voices and contributions when selecting board members. A diverse panel of directors can bring various perspectives, business expertise, ideas and experiences, significantly benefiting the company’s decision-making process, value and impact. – Dr. Flo Falayi, Korn Ferry
9. Choose Accomplished Members With Calm Acumen
Remember, nobody cares about the business more than you, but that passion can blind you to the objective reality of the business. With this in mind, choose board members who have a cool, calm business acumen. Their questions and observations will stop you in your tracks. It helps if they have achieved more than you, since that track record will demand your respect and prompt you to listen. – Dr. John Blakey, The Trusted Executive
10. Ensure Members Represent Different Perspectives
One essential tip that I coach leaders in this situation on is to think about diversity of thought when putting the board of directors together. In these situations, the CEO can attract those who have a similar experience and thought process. Focus on ensuring that you have different perspectives represented so that the best ideas can be explored through all the diverse experiences to find success. – Bryan Powell, Executive Coaching Space
11. Select Members Who Invest In Your Company
In the startup environment, board members are likely to also be investors. As the CEO anticipates upcoming rounds of fundraising, he or she needs to have confidence that the board member believes in the company’s mission or product and that they will support the CEO’s vision for growth. – Karyn Gallant, Gallant Consulting Group
12. Find People To Challenge Your Biases And Find Flaws
Find people who see the world differently, who will challenge your biases and see the flaws in your argument. Having people who can challenge the endowment effect of seeing more value in our own ideas can be catastrophic; seek out alternative viewpoints, and listen. Nobody says you have to follow through on them, but it will make your thinking more robust. – Ricky Muddimer, Thinking Focus
13. Seek The Expertise You Lack To Help You Scale
Look for board members who can support your company as it scales. This means the board as a whole needs to have a range of competencies, areas of expertise, perspectives and experiences—particularly representative of the areas where you are lacking. Having this kind of diversity of thought will help you make stronger, more innovative decisions as you grow in your leadership and as the company scales. – Melissa Eisler, Wide Lens Leadership
14. Avoid Choosing People With Similar Backgrounds
Prioritize diverse board members for better decision-making, innovation, market relevance and risk management. Avoid the temptation to fill the board with individuals who share similar backgrounds and viewpoints, as this may lead to groupthink and limited decision-making. – Anna Barnhill, Barnhill Group Consulting, Inc
15. Ensure Members Commit To Engaging Long-Term
Board members must fully commit to their role, including the time and effort required to participate in meetings, committees and other responsibilities. This isn’t just about showing up; it’s about being fully engaged, invested and prepared to contribute meaningfully, now and in the long term. – Nick Leighton, Exactly Where You Want to Be
16. Seek People Who Understand Your Current Realities
It’s very helpful to work with board members no more than five years ahead of your current business state; since the tech startup landscape shifts rapidly, people who are too far apart from their in-real-life operational experience might not be as helpful with current realities. – Alina Trigubenko, Profi
17. Keep The Board Size Manageable And Dialogue Open
Keep the board size manageable, maintain open dialogue through healthy dynamics and continually invest in member education and evaluation. A well-chosen board can significantly influence your startup’s path. – Lara Augusta, Embracing Potentiality
18. Pay Attention To Members’ Cultural Fit
A board with fiduciary responsibilities will impact the company’s strategic direction, so in vetting potential board members, pay close attention to their experience, skills and cultural fit with your organization. – Thomas Lim, Technicorum Holdings
19. Establish Trust And A Sense Of Shared Purpose
Focus on building a strong working relationship with board members. This involves clear communication and transparency, as well as a willingness to listen to and incorporate feedback. By establishing trust and a sense of shared purpose, you can ensure that your board is working effectively and collaboratively to help your company succeed. – Jonathan H. Westover, Ph.D, Human Capital Innovations, LLC
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