No doubt the wisdom your directors offer inside the boardroom is invaluable, but it's the networking and contacts they can deliver from outside that really build the company. A young company will particularly want directors to serve as matchmakers and advocates. But how to do this most effectively? Sarah Gerdes is CEO of Business Marketing Group, a sort of "business matchmaking" firm out of Kirkland, Wash., next door to (and closely tapped into) Microsoft. What does this Digital Age "Hello Dolly" suggest for putting your directors to work?
"First, of course, is investment. Often management looks to the board for its contacts in the venture world, and to identify the best course to seek funding. As the company gets larger, though, potential acquisitions are usually foremost."
"A second area is recruiting, particularly executive staff. The directors should have lots of experience and a deep network in this area to find outstanding personnel -- but this role for the board is often underused."
"The third area [or board networking] is with customers. By the time someone reaches a board position, they should have lots of experience in closing sales, making strategic contacts, and helping provide counsel to marketing." Gerdes sees nothing wrong with putting your directors in a hands-on role in making sales contacts or even helping to close a crucial deal.
"Fourth is partnerships. Building these can accelerate your time to market, add innovation, and also help with acquisitions."
Gerdes says that boards shouldn't hesitate to borrow a tool from the nonprofit board and lay out overt "productivity" numbers for each director to deliver. "The fund-raising requirements of nonprofit or foundation boards are a great model. Directors may be required to invest in the firm, or bring in so many millions in capital, or initiate so many partnership contacts, or introduce management to, say, five potential new sales leads. This needs to be thought out and discussed in advance, but could be written into the director's compensation agreement as a factor in setting either cash or equity."