If you don’t believe your board of directors provides your company with a competitive advantage, you should take action. Adding new talent, educating current members, and continuously engaging the board in robust discussions on strategy are all key elements of a company’s success.
It’s all about achieving the right mix. When board members bring diverse skills, specializations, industry knowledge, and experience to the table, and when they have honest, open communication with top management about the company’s current strategy and future prospects, many advantages accrue, including:
Improved access to capital, because lenders respond well to a company with a highly functioning and respected board of directors.
Favorable reactions from investors and other stakeholders, whose con1dence increases when they see that a well-chosen, well-quali1ed board will provide sage advice on everything from strategy execution to succession planning.
“In building a high-performing board, companies should proceed step by step, over time,” advises Eric Pillmore, senior advisor with Deloitte’s Center for Corporate Governance. “Adding even one new member can significantly affect the culture and chemistry of the board.”
Pillmore also suggests that companies think about “cornerstone members”: well-respected, high-pro1le board members who can give a board instant credibility -; and help recruit other highly quali1ed board members.
Even the best-quali1ed board members, however, may need additional development -; and most are very receptive to receiving it. Pillmore recalls one company that tapped the expertise of a former senior military officer. He brought many skills to the table but lacked experience in private-sector executive compensation issues. After being educated on the topic, he became a valuable member of the board’s compensation subcommittee.
The moral: Recruit a diverse slate of talented people, invest in their additional education when required, and, most important, make sure the board evolves in step with the company’s growth and strategic direction. Senior management should regard board composition as a key part of corporate strategy, which may require changing the mix over time.