Be it a public or a private company, the board of directors plays a crucial role in its success and sometimes failure too. Their constant interaction with the company's CEO is pivotal in deciding its future. Therefore, it goes without saying that putting a credible board is one of the most challenging jobs at which many companies have failed.
So, here let me ask you a question - Are you putting up a board of directors? If yes, I want to tell you that the chances of failure dwarf the potential of accomplishment unless you do one thing without fail - learn from other company failures and put a valiant focused effort into creating a board of directors.
Keeping everything in mind, A Wharton professor, Bernie Tenenbaum, came up with tips on building better boards. Tenenbaum is a YPO member who sat on over 50 boards and formerly served as the associate director of the Sol C. Snider Entrepreneurial Center of the Wharton School of the University of Pennsylvania, the oldest and largest academic program in entrepreneurship in the world.
Currently, Tenenbaum works as the founder and managing partner of Lodestone Global. Lodestone Global is a consultancy firm that primarily focuses on helping companies develop their board with strategic assessments and board designs. He does so because he understands the difficulty people face while trying to put up a strong board. A solid board is like the foundation of any company, public or private. So, with his experience, he decided to run his consultancy and share some valuable advice on building better boards.
Advice on Building Better Boards
This topic will focus entirely on the various insights that Tenenbaum had shared from his vast experience. He did so, hoping that others could learn a thing or two. And personally, my goal is to amplify his great advice, or we can call tips and build better boards. I'll be sharing most of his advice precisely the way he has quoted for complete authenticity. So, let's start looking at them one by one.
Strategy Precedes Governance
If you don't have a clear vision of your future, don't bother putting together a board of directors. Tenenbaum says, "The first step in building the perfect board is strategic assessment, which is a more challenging question: 'What do you want to be when you grow up?'" He continues, "Strategy precedes governance. Once you have a well-defined strategy, you have to think about governance." Also, a board requires a unique mindset.
Tenenbaum further advises: "Don't look in the rear-view mirror. Look out for the windscreen. When the dashboard works, it's there to drive Strategy and clarify goals. If you focus all your time on what happened yesterday instead of what will happen tomorrow, you won't be prepared for tomorrow. "The boards are there to improve CEOs in the future.
Question Yourself If You're Ready for a Board?
If your business doesn't need a board, you must think thoroughly about building a board. Understand that it's not required everywhere in every industry and company. It's not fun, and it can become a humiliating experience to get exposed like that, as some CEOs aren't a good fit. Besides, standing in front of a board of directors requires the confidence to challenge and be challenged.
"You have to be clear about where you are now and, above all, where you want to go," says Tenenbaum. A meeting also requires that you have time to devote to it. Try to understand that it won't work for every business, and that's okay.
Look Beyond Resume
It's tempting to get big names and resumes when building your board. Indeed, you need to ensure your board members have the right skills for the job. Tenenbaum knows it. So, he says, "If you're going sailing, don't get Sherpas who are good at carrying everything up Mount Everest. If you're going hiking, don't get tugboat captains." Remember that to put up a credible board is like an art. Board members do not need to have business skills. Tenenbaum advised. "It's people, not résumés? that you're looking for." And those people need to remember the humanity of those in the C-suite.
One of the most important things a board can do is ensure that the talent and, most importantly, the emotional health of the leadership are intact and focused. Tenenbaum further shares, "I always try to spend 45 minutes at the end of every board meeting one-on-one with the independent directors and CEO to find out how they're feeling. It's a lonely place sometimes, and it's not the kind of thing you can talk about with most people." After all, CEOs are also human.
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