Jim Balkcom is a friend of 5 years. He is a very respected businessman and loves Christ. Below is his bio and thoughts on building a Board of Directors for your business.
How to Build Your Board of Directors
It’s not easy building a high tech startup. But here’s a tip: When choosing your board, take the time and energy to make solid choices. Picking the right players for your board is critical for your company’s success and will save you many headaches down the road.
Here are some suggestions to make sure your board is a good one:
View the board of directors as an independent body
One of the most common mistakes by entrepreneurs is to “stack” the board with members friendly to their cause. While it may be comforting to know that your position is “secure” regardless of how well or poorly you are executing your duties, it deprives you of the opportunity for an honest, independent performance appraisal. An independent board is in the best position to take an unbiased view of the company’s and the CEO’s performance.
Compose the board of directors of outside members only
Sensitive issues arise in any company. Some of them may be related to the performance of key executives or the CEO. Others may be directly related to the future of the company, i.e., succession issues, financing alternatives or merger/acquisitions. These issues are best handled when the CEO is able to speak freely with his board and seek advice without other members of the management team present. A board with too many representatives from management, in our experience, is far less effective and often results in second-guessing and behind-the-scenes discussions and maneuvering.
Seek a balance of skills on the board
If you raise money from professional venture capital investors, they will usually request a board seat to look after their investment. Most reputable venture capitalists have experience in serving on multiple boards and can be of substantial value to your company. However, they are not likely to be experts in your specific line of business. Seek to balance the board’s composition by adding someone with experience in your market segment. In addition, make sure to include one director with a strong financial background and another who is the CEO or VP of marketing of a successful company in a complementary business segment. These people can provide insight not only on issues specific to your company, but also provide a broader perspective on industry trends, etc.
Communicate frequently with the board members
A board will function best when it is prepared, i.e., the members are up-to-date on the state of company and have had time to think through the major issues. One of the worst mistakes for an entrepreneur is to surface major bad or unexpected news during a board meeting. This forces board members into a reactive posture and doesn’t give them adequate time to reflect upon appropriate alternatives. We always encourage the CEOs of our portfolio companies to call all directors beforehand with a brief overview of the major topics to be covered at the board meeting. If possible, provide all board members with necessary materials for review well in advance of the meeting.
Actively seek involvement of the board
Too many companies view their board as window dressing and board meetings as a nuisance in which the management gives carefully rehearsed “dog and pony shows.” Qualified board members have a wealth of contacts that the CEO can and should tap into, whether potential customers, partners or additional investors. Outside board members can be effective in evaluating the company’s strategy and a valuable resource in recruiting other members to the management team. Don’t hesitate to ask and insist on their involvement in specific issues. If board members are unable or unwilling to spend the time necessary to help the company and/or CEO, they shouldn’t be on the board in the first place.
Listen to advice from the board
The board of directors is a legal structure that provides a fiduciary oversight of a company on behalf of all shareholders. Most of the time the board will agree with the strategy and actions proposed by the management. Sometimes, however, the board may disagree and even insist on a course of action that is different from the one proposed by the CEO and the management team. Heed the advice of your board members. They are not after your job, but are merely doing what is, in their judgement, in the best interest of the company and its shareholders.
If you treat your board of directors as an adversary that needs to be overpowered and controlled, you miss out on the value they can provide. But if you see them as an ally, you’ll be able to tap into a significant resource base with a tremendous payoff to you and your company.
Jim Balkcom is an Executive Coach, Leadership Mentor and Consultant. He is currently serving as the Civilian Aide to the Secretary of the Army along with running Corporate Psychology Resources, Inc. He is the Founding Partner of Council Ventures, L.P., CEO Council and Investment Committee 2001-Present and serves as the Chairman for Ikobo, Inc., Online Money Transfer. He has also served as the Director of eVault, Inc., the leading provider of online data protection and quick recovery services and software. A native of Atlanta, Ga., he resides here with his wife of 41 years, Linda. They have two daughters and four beautiful grandchildren. Jim is also a graduate of West Point and served in Germany and Vietnam, being awarded numerous medals for his service.
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