BUSINESS PLANS

Firing Your Board

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Okay. So I'm kidding. You can't really fire your board. But you can, over time, improve it. Call it a bloodless coup d'etat.

A few weeks ago I wrote about every manager's toughest task: firing someone. But for CEOs, an equaling, if not more, daunting task is suffering with a harmful board of directors.

The relationship between the CEO (or, for you non-profit organizations, the Executive Director) and the board is complex. It's fraught with challenges. In some situations, the CEO "hires" their board: asking your friends, family, and acquaintances to serve as your boss puts them in an obviously difficult situation. In other situations, as when you raise money from investors, your board is chosen for you when the investors nominate people to guide the company and protect their investment. In still other situations, people are asked to serve who--on paper at least--seem ideally suited to act as a consigliore, or a gray-haired mentor.

Unfortunately in far too many cases, the board is a disaster. And, as one noted expert (i.e. me) has written, a bad board almost always guarantees an organization's failure.

So what do you do?

First, read The Prince. No I'm not kidding. What you're about to undertake takes enormous political skill. Don't get me wrong; I'm no fan of Machiavelli's values. But you need to understand something of the dynamics of boards. Board members, even those who serve on non-profit boards, can develop an inflated view of themselves and their contributions. The result is that approaching, say, a board member who constantly falls asleep during the meetings and suggesting that perhaps the work is too strenuous will backfire; the quasi-narcoleptic will insist on staying because they can't conceive the company, the organization existing without them.

Similarly, the board member who only sees the negative side of things--"I'm thrilled we got that $1 million order but we'd better not ramp up expenses; I have other companies where the worst thing that happens is they start having tremendous sales wins."--will resist every suggestion that perhaps they're letting their fears overtake their senses and refuse to step down.

For too many board members, the role is an extension of their ego. Any direct attack on an ego will be vigorously defeated.

So, turning to The Prince, the answer lies in alliances. If you think of yourself, and each board member as--in Machiavelli's terms--princes, governing a set of constituents, you'll understand that overcoming one or two difficult members requires working with others.

First, build a cabal of like-minded members whose opinions and capabilities you admire--even if you intellectually disagree at times. Talk to this small group, outside of the board meeting of course, and explain your concerns about the board. Chances are good that they'll share those concerns.

Then assess each board member, avoiding if possible the temptation to target a board member because you simply disagree with them. Your goal is not to create a board that rubber-stamps every decision; your goal is increasing its effectiveness and even your staunchest critic may, in fact, be right at times.

Make a list of the dream team; what qualities would you most like to have in your board. For many non-profits, the existing non-functioning board is made up entirely of people who eat, sleep, and dream the mission; terrific, but you need someone who can help raise money. Similarly, for the start-up company, you need a mix of skills and experiences--again, someone familiar with the process of raising money is always useful; but so are people who know the market you're targeting.

Now comes the hard part; executing the coup:

  1. Have a member of the cabal (i.e. not yourself) suggest that the board adopt a strategic review of its effectiveness.
  2. Draw up a committee to oversee this review (with one member of the cabal on the committee). The size of the committee should be a function of the size of the board. It should be large enough to have a variety of opinions represented but small enough to be able to move quickly.
  3. The committee should undertake, as its prime work product, the establishment of new or re-written bylaws that will:
    a. Specify the minimum number of board meetings a member must attend to stay on the board. This is especially useful in dealing with the no-shows, a common problem for "volunteer" boards at non-profits.
    b. Identify specific responsibilities of a board member.
    c. Include job descriptions for the board members. One CEO I know even went so far as to try to undertake annual reviews of each board members' performance. It was a worthwhile effort that failed miserably.
    d. Set length of service terms. The terms can be extended indefinitely but with each opportunity to extend the term, you'll be able review each members' contribution.
  4. Create subcommittees. For some boards, especially very larger non-profit boards where some members are there primarily for the ability to assist in fund-raising, it's essential that there be one committee--an executive committee--charged with working closest with the CEO. Again, this should not consist solely of your friends; you need people who will tell the truth and argue their points. But you need an ability to streamline decision-making. Moreover, by breaking up into committees, you can make more effective use of each individual's skills. Got a difficult investor who's prickly and picky? Put them on the audit committee. You want someone who obsesses over details working with your independent auditors. Got a soft-touch guy who can't add to save his life (like me)? Put them on the compensation committee and the morale of the staff will become a board priority.
  5. Use the executive committee to start recruiting new, additional board members. If the size of your board is limited (and there are plenty of good reasons to limit the size of your board) start thinking in terms of trading up skill sets. If the board is dominated by poor performers, set the term at no longer than a year and begin asking board members to step down "at the end of their term."

With an average-sized board of seven to nine members, it will take approximately 12 to 18 months to complete the coup.

Am I callous and calculating? Yes. But, like the process of terminating a poorly performing employee, you owe it to yourself and your employees to have the best board possible. And remember; nothing I've said absolves you from your obligation to act with dignity and in accordance with your values and principles.

"EVERY one admits how praiseworthy it is in a prince to keep faith, and to live with integrity and not with craft. Nevertheless our experience has been that those princes who have done great things have held good faith of little account, and have known how to circumvent the intellect of men by craft, and in the end have overcome those who have relied on their word. You must know there are two ways of contesting, the one by the law, the other by force; the first method is proper to men, the second to beasts; but because the first is frequently not sufficient, it is necessary to have recourse to the second. Therefore it is necessary for a prince to understand how to avail himself of the beast and the man."

The Prince
by Nicolo Machiavelli

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Last updated: Sep 1, 2004




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