By Bill Caswell
Special to Ontario Construction News
What dictators and autocrats have in common is the absence of an overseeing Board of Directors having the power to control any excesses. And those autocratic excesses have not only caused inestimable pain to the masses, but those same excesses often led to the demise of the autocrat himself or herself. A Board of Directors can not only help a leader avoid his or her downfall; the board can accelerate the growth and prosperity of the leader’s enterprise. Do you have a board?
If not, you are missing a helper for your enterprise. A properly constituted board will:
- Act as a sounding board
- Provide knowledgeable advice
- Veto impractical or unethical actions
- Help you keep your feet on the ground
- Hold your hand when you are in trouble
- See things to which your situation makes you blind
- Stop you from making stupid (emotionally based) mistakes
Too small a company?
A common failing of small organizations I have coached is their belief that they are too small to have a board. Nothing could be further from the truth. I ask small business owners to examine the bulleted list above and please tell me which of those board advantages you do not need. YOU NEED THEM ALL. Ergo, you need a board.
Setting up a board
Don’t be overwhelmed by the legalities of a board that plague the messages from business books and the Internet. Keep the concept small, manageable, and perfectly legal. If selected board members are worried about liabilities associated with your company, first: you probably do not need such people on your board; and second: to mitigate this concern, call it a Board of Advisors, not a Board of Directors.
Assign three people to your first board (plus yourself). It can become larger as you progress. Select friends whose opinions and wisdom you respect. Do NOT select other company employees or family to sit on your board. Your friends (on the board) may not understand your business, but it doesn’t matter; in fact, it may increase their objectivity. If provided with the correct information, your friends will grasp what is at stake and help you make sound decisions. Of course, you can select experts in various domains to make up your board, but at the beginning they probably are not necessary.
Don’t pay the board members to start. Three people (an odd number) are needed so that in the case of a tie vote, you will not be the one to break the deadlock; you’re too subjective.
Operating the board can be fairly painless if you adhere to some of the suggestions that follow.
Frequency and duration of meetings
I suggest you start off with a one-hour meeting once a month, and then adjust from there.
Safe environment meetings
Apply the rules of respectful, safe environment meetings: no interrupting allowed; pass the speaking baton to the first person on the right of the present speaker who has a hand raised indicating a desire to speak. Of course, adding our recommended details of a referee and a penalty box will only enhance your board event.
Agenda of meetings
The agenda, which ought to be sent out at least a week in advance of the meeting, should have time allocated to each of the agenda items. Your agenda might look as follows:
- Review of main activities since the last meeting 8 min
- Company performance to date (sales, profit, or whatever you feel important) 10 min
- Concerns facing the CEO or the company 20 min
- Discussing new endeavours to be launched 20 min
- Setting a date for next month’s meeting 2 min
You will not vote on every issue, only issues of deep concern or of notable conflict. The majority will carry the issue. However, since we are suggesting a Board of Advisors (and not a Board of Directors), they would have no legal power to ensure the vote is put into action or even to veto it. However, the wise leader would respect the combined opinions and carry on as if the vote were legally binding. This is the method of checks and balances to keep the leader under reasonable control. Most democratic governments employ the idea of checks and balances of the leader vs. the rule of law: in Canada the prime minister in the House of Commons and the bills being put forward are checked by the Senate; in United States it is the president vs. Senate and the House of Representatives.
Finally stated job of the board
Let there be no doubt about the priorities of the board. Number One is to assist the leader. Everything else is secondary.
Then the board can look after the interests of those next most affected by the company’s operations, the employees, since they rely on the company to continually put bread on their family tables.
Following in importance, of course, is the other stakeholders, including shareholders, suppliers, and community.