The 3 Signs That your Business Needs a Board of Directors
There comes a time in the lifespan of every expanding business when they simply don’t have the capacity to directly approve every important big-picture decision as well as their day-to-day affairs. This is the point at which many would simply hire more staff to help ensure that things in the office are running smoothly, leaving the CEO in charge of overseeing things in a broader sense.
However, if your enterprise is really looking to scale up, you should consider recruiting a board of directors. No longer just the remit of companies going public, instating a board can provide a wealth of advice, backed up by decades of collective experience and keen insight into the trends and issues affecting your sector. As leadership advisory firm Egon Zehnder notes, a board is able to “provide judgment and wisdom on how to ‘do things better,’ taking advantage of global and technological opportunities while avoiding traps and ensuring growth and sustainability”.
However, this isn’t an easy task, and while a board will have broad industry knowledge, they’ll also need an understanding of your brand and the values your business represents. If you’re not entirely convinced, or you simply aren’t sure whether now is the time, we’ve put together a list of ways you will be able to tell if you need to assemble a board of directors for your business.
If your company culture is on shaky ground
According to a 2019 PricewaterhouseCoopers survey, a board of directors can be especially useful when trying to redefine what your company is all about. The accompanying report points out that “culture problems are often at the root of corporate crises”, and a board can root out any issues from the top down. This works because a board of directors are not directly involved in the daily minutiae of a company, enabling them to take a comprehensive approach towards how a business is run, starting with upper management.
As a result, having an independent group of individuals to oversee the management of your company can have an immediate impact on how things are within your office. As Diligent Insights notes, one of the key reasons for instating a board in the first place is “to determine the purpose of the company and to ensure that the company’s values, strategy, and business model are aligned”.
If you’re out of step with your staff
Even if you’ve been responsible for building your company from the ground up, your responsibilities as a CEO will likely have mounted to the point that losing focus on your day-to-day goings-ons is unavoidable. This is where a board of directors can prove essential, helping you to reconnect with your team, not only on a practical level, but through their own experience.
Writing for Quartz, Betsy Atkins explains that a company’s board should be put together in a way which provides “a trusted and critical eye to be sure the team is bringing the knowledge and tools that will help your company” moving forward into the future. However, as Atkins notes, the key thing to keep in mind is making sure that every member of your board understands your company’s vision, and has that all-important chemistry with the other members and the company itself.
If you have shareholders
The most important time to form a board is when it’s a legal obligation to do so — specifically, if your investors formally have shares in your company. This is because their interests need to be represented by a separate group who can provide feedback to the company. It underscores the significance of having an impartial group of individuals to help influence decisions and offer advice.
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