Does Your Board Need an Entrepreneur?

Young business lady is thinking about spreading her business

Board members tend to have lots of experience in at least one of these three areas: financial expertise, industry-specific knowledge, or operational management. Over the past couple of decades, though, companies have become more interested in diversifying their boardroom—both in race and gender as well as in expertise. Today, you’ll find individuals with backgrounds in marketing, IT, and human resources in addition to the “classic” board member tracks. The latest trend, however, is adding someone with an entrepreneurial background to your team of directors, and we’re big fans of this movement.

Here’s what entrepreneurs can bring to the table:

  1. A focus on long-term, strategic thinking.

Boards are constantly being pulled between short term goal-oriented oversight and long term, strategically focused planning. Entrepreneurs are generally going to default to strategic thinking and will help pull your board out of conversations that should be left to your company’s C-suite. Entrepreneurs are the true “visionaries” of the business world and offer a complementary element to boards that already favor members who are well-versed in risk management or short term, operational guidance. This isn’t to say that entrepreneurs will always be right about their theories or suggestions, but their presence alone will force more conservative members to tackle some out-of-the-box thinking.

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Respectfully Removing a Board Member

removing board member

According to the PwC Directors Survey we covered last week, 40% of board members believe that at least one member of their board needs to be replaced. With boardrooms standards rising higher than ever, it’s no surprise that some board members just aren’t measuring up. Removing a board member, however, is an extremely sensitive process that few are willing to undertake. Here are our tips for proceeding with the utmost respect and consideration. (Keep in mind that the procedures for companies vs. nonprofits will vary slightly according to individual rules of governance.)

  1. Review your bylaws and follow them.

Before taking any action, determine whether the member in question truly isn’t meeting the standard for his or her outlined duties. Make sure that you collect fact-based evidence only. Look at the bylaws for your organization, and utilize the processes it will likely lay out for this sort of scenario. According to Sam Ashe-Edmunds of Demand Media, “Your bylaws might require the board to justify any removal based on fraud, conflict of interest, personal conduct, lack of fitness to serve or failure to perform.” You’ll need to establish exactly which aspects of the role the board member has not fulfilled or why their presence is no longer productive for the board.
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PwC’s Annual Board Survey Provides Board Insights

PwC Annual board surveyFortune 500 powerhouse, PwC, recently released the results from its annual Corporate Directors Survey. The assessment, which can be viewed here, offers a great deal of insight into how board priorities have shifted in recent years. PwC also made it clear that they were interested in tracking a particular recent trend. In the report they explain, “We structured PwC’s 2015 Annual Corporate Directors Survey to gauge director sentiment on whether their boards have oriented themselves toward a longer-term governance focus in light of short-termism.” They further explain the dichotomy between short term and long term focus by saying, “Most companies are looking down the road, focused on ‘enhancing long-term shareholder value.’ Yet they are simultaneously preoccupied with a need to look in the rear-view mirror and meet the short-term expectations of investors in the form of quarterly earnings.” The report is well worth the full read, but here are some highlights:

  • Corporate directors continue to rank financial expertise, industry experience, and operational expertise as the three most desirable attributes for board members.
  • Female board members continue to place importance on the development of board diversity at rates higher than their male counterparts (63% vs. 35% saying board diversity is “very important”).
  • Directors are overall more engaged with IT issues—with 83% saying their board is at least moderately engaged in overseeing/understanding the risks of cyber attacks.
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Four Questions About Board Surveys

board surveys

Why Survey?

The New York Stock Exchange requires listed companies to participate in some form of annual self-evaluation, so many organizations already have a board survey practice in place. But for some of these companies, board self-assessments are met with an attitude of obligation instead of embracing the potential benefits of a well-executed survey. For other smaller companies, this practice has simply been overlooked in the past. However, there are many reasons why all boards should view annual self-assessments as an outstanding resource for bettering their overall functionality. For example:

  • Board surveys can help identify group strengths and weaknesses.
  • Willingness to self-assess sets the tone for the organization at large; it shows that board members are taking their roles seriously by reviewing their own performances through a critical lens.
  • Discussing board members’ responsibilities and goals can create a more unified and collaborative working environment.
  • Tracking year-over-year changes in board members’ responses can provide meaningful insight into a changing board landscape.

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Signs of Board Success?

signs of board successSigns of board success can take any number of shapes, and the bottom line for measuring a board’s accomplishments will vary from organization to organization. But when it comes down to overall effectiveness, there are some tried and true signs you can look for to better understand your board’s overall functionality:

  1. Your board’s structure is clear and encourages efficiency.

Boards vary in size and in structure, but experienced board member and Stanford GSB lecturer David Dodson has found one universal factor that he believes is a sign that boards are on the right track. He writes that all boards—even small ones—need a clear, outlined structure for how meetings will be held, how often board members must be in attendance, and what is expected from them both inside and outside of board meetings. Dodson insists, “My strongest advice to a CEO or a board member is to put that scaffolding in place.”
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All Board of Directors Need Tech Expertise

boards need tech expertiseAccording to Jean-Louis Bravard at Harvard Business Review, it’s simple: “All boards need a technology expert.” Bravard investigated the banking industry in England—an industry that relies heavily on technology—and found that only one bank had a tech expert serving on their board of directors. He insists that many major banking leaders in the U.K. need huge tech overhauls but are afraid of the risks—both financially and from a data safety perspective. Bravard argues, “Only a multi-year, board-level sponsored effort can ensure a responsible IT overhaul. But without IT expertise at the director level, how can a board truly make an educated decision?” To put it simply, get someone who works in high-level IT on your board, and do it quickly—especially if you want to follow a long term, adaptable IT strategy.

For Dambisa Moyo, an international economist, things are a little less cut and dry. She asserts, “The industry structure in which a business operates should also influence how a board assesses technology effects.” She follows that up with three viable paths forward for bringing tech knowledge to a board setting. The first is to “delegate technology tasks to management.” In other words, let the responsibility of technological evolution stay in-house with a CIO or a CTO. The second option is to draw from the expertise of independent advice. This could mean hiring an outside IT consultant or forming a group of advisers that report to the board. The final option is the one we’ve already heard: creating a seat on the board for a “techie.” She encourages boards to take a long look at their particular industry to weigh the pros and cons for each of these options.
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Boardroom Spring Cleaning

boardroom spring cleaningWhile some of our neighbors to the north are still dealing with the occasional snow flurry, down here in Birmingham we’re settling into a lovely spring. The flowers are blooming, the sunshine is splendid, and it’s just the right time for some good old-fashioned spring cleaning.

While you’re on a cleaning kick, why not transfer some of that energy into your boardroom? No, we’re not talking about vacuuming the carpets or dusting the shelves: we’re talking about sparking efficiency and productivity! Now is a great time to organize some of your board operations and make the move towards a tidier board experience overall. Here’s our step-by-step spring cleaning guide:

  1. Clean up your communications.

Let’s start with the issue that’s nearest and dearest to our Directorpoint heart: simplified and streamlined communications. Currently, your board of directors might connect via any number of methods: email, hard copy mail, phone calls, txts, and more. What if you could incorporate all of those touch points into a single, easy to understand hub? Well, the great news is that you can!
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Being an Effective Board Chairman

effective board chairman

Effective leadership is a topic that has been visited and revisited by business publications, psychology magazines, and more. People have a lot to say about leadership and what makes a particular style of leadership great. But when it comes to board leadership, what really puts a board chair a head above the rest?

  1. Effective board chairs seek meaningful contact between board meetings.

According to Harvard Business Review, “Impromptu discussions strengthen a board’s hand on the company’s pulse. Keeping board members informed also minimizes the time spent on background that slows up regular board meetings.” When board chairs take the lead to spark conversation outside of meetings, other board members are more likely to follow suit. At Directorpoint, we encourage this sort of collaboration outside of the meeting with our member-to-member messaging system. Instead of clogging one another’s inboxes, board members can reach out to their cohorts quickly and easily both during and outside of meeting times.
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Three Ways to Liven Up Board Meetings

liven up board meetings

Board of directors meetings are notoriously long—sometimes lasting upwards of 4 or 5 hours for boards that meet less frequently. Meanwhile, in the age of tech, we’re also being told we have attention spans shorter than a goldfish. So how do we liven up board meetings to help the collaborative and innovative nature of the boardroom thrive?

  1. Incorporate movement.

This is a strategy that elementary school teachers have been employing for decades. When they see their students growing antsy or bored, they encourage kids to get up and dance around or do some group exercises. Then, they refocus the students to the task at hand, or they incorporate the movement into the actual task.

OK, so maybe we’re not going to see board members dancing around the boardroom, but the principle behind this tactic is a good one: the happier and looser our bodies are, the easier it is for our minds to focus. So how do we translate it? It can be as simple as employing a series of really regular bathroom breaks or as involved as incorporating some stretching elements into the actual meetings. Either way, board members need time to decompress physically and mentally. Marathon-ing through a 4-hour meeting probably won’t lead to top-notch attention and involvement.
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The Paperless Boardroom: Less Is More

Confident accountant doing financial reports being surrounded by business partners with huge piles of documents

Large companies have been going paperless for years now, and there are countless reasons why it’s a major trend. Even though the benefits are plentiful, many boards of directors haven’t followed suit. They have remained firmly tied to old ways of printed board packets either out of habit, fear of change, or both.

At Directorpoint, we’re big believers in the paperless boardroom for many reasons—some of which are similar to why companies are headed that direction in general. In addition to the fact, that it’s just plain good for our environment, we’ve compiled a list of reasons why creating a paperless boardroom can bring your board better results overall.

  1. Going paperless saves time.

Board members are some of the busiest people in the business world. Typically, their time is limited and therefore, highly valuable. Using a system like Directorpoint that eliminates the need for paper saves time prepping for meetings as well as time used during meetings. Board software “keeps everyone on the same page” without actually involving any pages!

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