I hate to say this, but some startup boards end up having to deal with bad behavior from directors. What happens when board dynamics don't seem to be going all that well? I've adopted the term "hacking your board" to reflect that fact that for early startups, dealing with a board is about making the best of a situation you cannot fully control. There are hacks for planning and running a meeting and a checklist of expectations you should have for your board. Now let's prepare you to recognize some bad board behaviors and try to correct them before they undermines the success of your company.
Confusion About Roles
This is your company to run. It is the job of the CEO and his or her management team run the company. The board supervises and observes. The board should not be getting into the operational weeds. A respected angel investor, Ham Lord, has observed that great startup directors should have their noses in the business, but their fingers out:
"As a director, it's your responsibility to nose in and pay attention to what's happening with the business. At a high level this means you are aware of the company's key risks, and you understand what management is doing to mitigate these risks. To get this type of insight, you have to have your "nose in." But you are a director, not management. "Fingers out" is just another way of saying, "Be a director - you can advise, but let management run the company." If you are constantly micromanaging the business, you remove any power or responsibility the management team has to make decisions and move the company forward. .... Boards that try to hold management accountable while simultaneously meddling and interfering are not going to get what they expect. You either end up with weak management, a diffusion of responsibility, or both."
As a founder, you want board members who are engaged, present, and involved, but not directors who are suffocating and micro-managing. The key is to make those expectations clear from the outset. Even assuming your directors understand their role broadly, there can still be significant issues to contend with. These issues fall into a number of categories, including logistical issues.
Issues with Logistics
Chances are your directors are busy people with other professional commitments. To get experienced, value-added people, other pre-existing commitments is almost a given. But your directors must make your board a priority if they are to serve professionally.
Directors who do any of the following are telling you that your board is not a priority for them:
- consistently late to meetings,
- double-book and leave meetings early,
- request last minute schedule changes or start times,
- insist on dialing-in at the last minute to every meeting,
- are impossible to schedule for meetings, or
- come unprepared
This self-important conduct is not acceptable on the part of a director. It is distracting, disruptive, annoying to other directors, and undermines the functioning of the board and the company. One of the most harmful signals it sends is that neither the CEO nor the board itself needs to be respected by the other directors. Left unchallenged and unchecked it sends a strong signal to others that it is ok to blow off their commitment to your board.
As a CEO you need to call them out on these issues and tell them you expect more. You do not need to be overly confrontational, but you need to be firm. For example, you can inquire as to what items are presently competing for their time and whether they expect those conflicts to resolve themselves in the near term. If they are being paid with stock options to serve, it might be appropriate to point that out and that you and the shareholders expect them to prioritize this for the stock they are being given. If they are not being compensated, and you believe they have the potential to reform and be a desirable part of your board, you may ask them if being paid would allow them to prioritize your board more appropriately. You can offer to coordinate with their admin, or to put buffer or travel time calendar requests on either side of the board meeting. You can make an effort to schedule board meetings 6-12 months or more into the future and make it clear you are doing that to ensure all will be present at all meetings.
You job is to deliver performance to the shareholders, and the boards job is to help and to make sure you do that. If the board is not showing up on time and ready to go, they are not doing their job. Regardless of how you ultimately choose to confront the issue, you must deal with it. If the bad logistical conduct cannot be fixed after some corrective effort, the director needs to be replaced.
Now you have some ideas for addressing issues around roles and logistics, which are relatively clear cut. Next in this series we will look at dealing with the trickier issues of attitude problems, interpersonal problems and competence deficits.