Boards have existed since the 17th or 18th century in different forms and with evolving functions. They’ve evolved very slowly and been very reactive to change, relative to other corporate functions. In this podcast Jaime Grego-Mayor: Managing Partner, Advisory Board Architects talks to Mark Hamill about how to become a board member and add value to a board.
Summary text of Global Conference Call
Jaime Grego-Mayor: Managing Partner, Advisory Board Architects
Let me give you a very brief bit of history of boards. Boards have existed since the 17th or 18th century in different forms and with evolving functions. They’ve evolved very slowly and been very reactive to change, relative to other corporate functions.
Through an ongoing cycle of corporate scandal à new rules à corporate scandal, BoDs have been saddled with new and ever more complex requirements. This has been to the detriment of other key functions of the board, like strategy formation and company growth.
This has affected mostly publicly listed companies, while basically ignoring the needs of the vast majority of companies, the unlisted. It has, however, affected how those companies consider governance and boards by way of so called best practices. Governance has become, for many, a necessary evil of no real benefit.
Boards are the apex of companies, with a non-executive role that can accurately be described as governance, but there is a great difference between complying with governance rules to the letter and having true good governance. Having a board that is solely centered on control is grievously underutilizing its capacity. At ABA, we know companies can and should improve board performance to use 100% of their capacity and create high and quantifiable strategic impact.
This is especially true in unlisted companies where ownership and decision making is concentrated. These companies do not need complex shareholder representation structures, but they do need a group that will provide a sounding board, support and subject matter expertise to the CEO. This can be done through the conventional Fiduciary Board of Directors structure, but can also frequently be done as effectively through non-fiduciary Advisory Board structures.
It’s done by starting with the end in mind. A company needs to think of 3 things when considering its board: WHY, WHO and HOW.
First: WHY they want a board. What are the mid and long- term goals that a group of subject matter experts should help them to achieve.
Then, and only then, consider WHO to put on the board: people who will drive the company towards the WHY.
Finally, HOW to run an effective board process to maximize impact. What structure, meeting cadence, and the process before, during and after meetings.
From that background, let me pull out strands that are important as you consider being a board member. Again, start with the end in mind: WHY, WHO and HOW.
WHY do you want to be a board member? It should be to have a high impact on the company and yourself as well, through the learning this experience provides.
WHO should you want to be a board member for:
First, change your concept of the post from board member to board leader. Clubs have members. Boards need leaders.
Be a board leader where your experience and expertise is directly applicable and impactful to helping the company go from where it is to where it wants to be. Where you can be the right WHO to their WHY.
Be a board leader where you will not be alone as an independent thinker. WHO will sit around the table with you? Will it be enriching to you to sit with them?
Be a board leader where you see there is a good board process, a good HOW:
Where the role of the board is not only control, but also business strategy and growth; where the board is well run; where each meeting has a clearly set out agenda; where good documentation is sent out in time; where board, and board leaders are evaluated. And most importantly, where executives are prepared to listen and learn from their board.
Important steps to take to get the first board seat:
First, get trained. Governance organizations around the world offer this kind of training (more focused on traditional governance). ABA offers training as well, focused more around strategic impact and effective planning for getting that board seat.
Second, adapt your resume for board positions. Consider and highlight those areas of expertise that make you more unique. Go beyond strategic thinking and generalist knowledge to subject matter expertise.
Third, get involved. This can be done through mentorship programs for smaller companies or sitting on the board of an interesting non-profit.
Fourth, get networked. Talk to people like ABA, SF and other headhunters, PE funds that invest in company types where you could have impact, auditors and lawyers (who often act as board secretaries).
Fifth, review your contacts and talk to people who are directors, advisors or CEOs that you respect and who respect you, about the idea of having a board of directors or board of advisors – or a better one than they do now – and how this can make their company perform significantly better.
Sixth, don’t take the first board seat that’s offered without making sure you will be able to truly impact the board and the company as a board leader. Having that impact will be rewarding and make you feel engaged. At ABA we’ve found that the most important indicator of board effectiveness is board leader engagement.
Finally: Your most valuable and irreplaceable asset is your time, use it wisely.
Get involved with boards where you will enrich others and be enriched. Get involved with boards where you feel engaged. Get involved with boards where you will create true IMPACT.
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