Overboarding Boardrooms

Keep the board small so that a discussion among all board members can be held. Imagine your kitchen table, where many of us sort out the truly important things in life, as a limiting factor.  All required board skills should fit around such a table. The tricky thing is to get them to act together in the best interest of the company. Seeking the right Board composition forces us to make choices.

Competencies and Interaction

Given the limited number of people, „How to put together an effective board” is quite an exercise. Board work can be simply frustrating if the mix of individuals does not fit. This affects interaction and team spirit as well as  balancing diverse individual competencies.

Independent judgement improves with the understanding of the company´s competitive position and its strategic needs for the mid- and long term. Love of detail and visionary thinking need to go hand-in-hand, just to give two examples. Last but not least, we should accept that emotions play a role. In a recent nomination interview, when it came to a more personal question, all of us suddenly could not help but burst out laughing and sharing our own solutions – the ice was broken.

Special Roles

Board observers can provide an external perspective and support. They take part in board meetings but should not speak. Through their presence only, they form a part of the group dynamics, but they do not vote and do not take responsibility. So are they useful for you when it comes to making a decision and reacting to sudden events? There is no easy answer, think it through before you constitute observer roles.

Another type of director is a nominee sent by an institutional investor. They can prove to be very helpful in supporting the company’s growth, but consider the motivation: Does the desire to fill a board seat stem from the commitment of the investor  and does it bring a specific competency that would otherwise be missing on the board, showing drive and ability to help steer the company? If so, then go for it. Involving other interests needs careful consideration and, perhaps, alternative options to satisfy them.

Trends

Practically applied, these considerations will lead to a matrix whereby the board chair, assisted by the company secretary, has a clear picture of (1) the roles on her or his board, (2) the individuals that currently fill those roles, and (3) potential candidates who may succeed them – well before the normal tenure of a board member ends. Great help to achieve an excellent board composition once appointments need to be made for unexpected vacancies!