Maximizing Your Board

Faced with daily challenges and opportunities, CEOs of growth companies must focus continually on the pressing and competing demands of clients, employees and shareholders with only a few close advisors or confidants to provide feedback or guidance. Assembling the right board of directors works to fill this gap, dramatically changing corporate governance, opening new opportunities and providing a resourceful sounding-board and a set of strategic advisors for a CEO.

Building the most efficient and effective board of directors requires skill and foresight. As growth equity partners, one of our most important objectives is helping CEOs attract a strong, well-rounded board of directors. We strongly favor adding independent directors with extensive operational and industry expertise, leadership skills, committee experience and most importantly, those executives willing to commit the time and resources to help beyond the formal meetings and board obligations.

Independent directors bring a strong and influential voice with a strategic perspective, and can provide expertise in areas such as finance, e-commerce, supply-chain, marketing, right-shoring, human capital and a host of best practices. Importantly, they provide the following:

AN EXTERNAL PERSPECTIVE TO PROVIDE CONTEXT
Since a CEO's schedule tends to center on the daily responsibilities of running a profitable company, additional knowledge of the market and its competitive dynamics from independent directors is very helpful as a company scales. And while it is useful to add functional skills that are not industry specific, industry expertise is critical in most cases. As growth initiatives are developed, a CEO should expect a strong board to provide contextual knowledge of industry trends, technological innovations such as disruptive changes and emerging ecommerce models, and changing competitive dynamics and best practices across critical areas as diverse as supply chain efficiencies, compensation practices or regulatory changes.

SPECIFIC EXPERTISE, ESPECIALLY IN COMMITTEE WORK
A board of directors provides solid governance and counsel; committee involvement is an essential part of these responsibilities. As companies look to new stages of growth, such as global expansion, m&a, preparing for an IPO or strengthening their own management teams, a seasoned director's committee involvement and willingness to engage in deliberations helps to clarify goals and make disciplined decisions. The director should be actively involved in one or more committees (e.g., nominating, audit, compensation, risk) based on past experience and future goals for the company. Independent directors with prior board experience or specific functional expertise, particularly current or recent C-level executives with broad networks, can add tremendous value in the detailed work of board committees.

AN EYE ON THE FUTURE
A key role for the board of directors is to provide focus on the future, a view of the "forest" to balance out the management team's focus on the "trees." While the goals and priorities should be clearly aligned with a management team's, it is the board's responsibility to guide the company through new pressures and prospects within the industry, properly aligning objectives with competent execution. In addition, a clear and impartial view should be kept on organizational performance, crisis planning and risk management, all areas that benefit from the perspective of the board.

To take full advantage of independent directors, growth company CEOs need to think creatively about the best candidates for their particular needs. The typical responsibilities of a growing company's independent directors demand specific qualities, and the best board directors are not necessarily CEOs with "marquee" names. Rather, they are successful individuals who thrive on the challenge of growing a company from one level to the next. They must have the desire to be involved in strategy and operations and have the time available to do so. These directors seek the opportunity to have a greater impact, to help a growing company mature and succeed.

For further discussion on identifying and attracting independent directors to your board and what you should expect from your advisors, please contact your GA team.

Written in collaboration with Marie E. Kelly and Roger M. Kenny of CTPartners Board Consultants