Assembling the perfect board
Building the perfect board for your company is a critical task that can make or break your business. Having led both public and private companies and founded several startups, I’ve learned that the right board can provide invaluable guidance, support and strategic oversight. However, high quality board members are a hen’s teeth rarity, so here’s a detailed look at how to create a board that will help your company thrive.
The ideal board composition
Creating the board that’s best for your business is about striking the right balance of experience, sector knowledge and alignment with your company’s vision. At JustFix, we’re in the process of selecting additional board members, and we focus on several key criteria:
- Blend of experience and ambition: It’s not just about age but the right mix of experience and fresh perspectives. Experienced board members bring wisdom and a track record, while ambitious individuals can provide innovative ideas and a forward-thinking approach. This blend ensures that the board can guide the company through both steady growth and disruptive innovation.
- Sector expertise: For JustFix, which operates in the home maintenance sector and functions as a marketplace, we look for board members with specific industry knowledge. This includes construction and maintenance experience, as well as expertise in marketplace dynamics. While it’s rare to find someone who perfectly fits both areas, having diverse sector experience helps transfer innovative ideas and practical knowledge.
- Public company experience: It’s invaluable to have board members who have served on the boards of public companies. They understand the regulatory requirements, investor expectations and the intricacies of maintaining corporate governance standards. Their insights can help navigate the complexities of public markets.
- Cultural and vision alignment: The board should share your company’s vision and values. This alignment ensures that decisions are made within the right framework, preventing misalignment that can lead to strategic conflicts. However, it’s crucial to balance this with diversity of opinion to avoid groupthink and encourage healthy debate.
Finding the right people
In my experience, leveraging your network can be a powerful way to find board members. At JustFix, everyone on our executive team and board so far has come through personal connections. However, because selecting the right board members is so crucial, we also use non-executive director (NED) recruiting platforms to widen our talent pool. These platforms can provide a curated list of highly qualified candidates who might not be within your immediate network.
Keeping the board lean
One common mistake is to load the board with too many members too quickly. A large board can become unwieldy and slow down decision-making. For JustFix, we aim to keep our board lean with a balance of executives and non-executives. This approach allows for more effective governance and quicker decision-making, which is vital for maintaining agility in a fast-paced market.
The role of the board
The primary role of the board is to support the executive team with their experience and advice, while also providing a check on executive decisions. Regular board meetings help create a structured rhythm for the business, ensuring that management stays on track with its strategic goals and financial performance.
Board members should act as mentors and advisors, offering guidance without overstepping their bounds and, crucially, providing an essential sounding board for the CEO. As this Deloitte report explains: “The board relationship is really the most critical factor in [a CEO’s] success.”
Lessons learned
From my experience, here are a few key takeaways for assembling an effective board:
- Don’t rush the process: Take your time to get to know potential board members. Beyond formal interviews, spend time with them in informal settings to understand their values and working style. This helps ensure that they’ll be a good fit for your company’s culture and strategic direction.
- Get references: Just like with any senior hire, thoroughly check references. Understand their past performance and how they’ve contributed to other boards.
- Be aware of power dynamics: Remember, while you’re initially hiring them, board members eventually hold the power to hire or fire the CEO. As a former chief exec colleague of mine once jokingly said to me: “A board means that there’s one day a month where I can be sacked.” Ensure that you’re comfortable with their ability to make balanced, objective decisions.
- Balance control and support: Avoid cronyism but also be wary of control freaks. You need a board that will challenge you constructively, not one that will try to run the company themselves.
The importance of effective governance
Effective governance is crucial for any board. This includes setting up committees like audit and remuneration committees to handle specific responsibilities. These committees report back to the main board, ensuring detailed oversight without bogging down full board meetings with minutiae.
As the Harvard Business Review notes, good governance practices involve clear roles and responsibilities, regular self-assessment and ongoing education for board members to stay current with industry trends and regulatory changes.
Assembling the perfect board is a strategic endeavour that requires careful consideration and planning. By focusing on a blend of experience, sector knowledge and cultural alignment – and by keeping the board lean and effective – you can create a structure that supports your company’s growth and strategic goals.
For fellow founders and CEOs embarking on this journey, take the time to build a board that truly adds value. The right board can provide the guidance and support needed to navigate the complexities of growing a business, whether privately held or public. Those monthly meetings give the company the sort of steady rhythm of reassurance – and checks and balances – that are essential to any healthy business. And remember, while the process might be challenging, the long-term benefits of having a strong, supportive board are well worth the effort.