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Tips on Creating Your First Board of Directors
What’s the difference between Advisors, Mentors, Coaches, and Board Members?
When it comes to choosing individuals to offer their advice, it can be easy to put everything into one category, but that’s not a particularly beneficial perspective.
While there’s no one-size-fits-all secret formula for managing your network of advisor, investor, and mentor relationships, here are some patterns and best practices. Below, you’ll find an advisor relationship cheat sheet.
Feel free to download this guide as an easy reference pdf here.
Why do I need a board in the first place?
While boards are helpful in holding CEOs and other leaders accountable, they can also be a strategic tool for your company to take advantage of. There are a few specific roles many boards excel at and might play within your startup. Here are four to consider:
- To be a forcing function.
- To help in pattern matching.
- To help you see both the forest and the trees.
- To drive intellectually honest discussion and debate.
How many board members do I really need?
This new startup board mantra is simple: 1-1-1. It suggests:
- 1 member of the management team should be on your board.
- Then 1 independent director for every 1 investor
- Simply put, this means you should grow from having 1, to 2, to 3 independent directors as your board grows from 3, to 5, to 7 members.
What should I look for in a new board member?
Here is an in-depth method to help founders formulate their director search criteria and think about board-readiness in a broader way.
- Prior board or board-equivalent experience.*
- Advisory needs/gaps.
- Cultural/experiential attributes.
- Governance philosophy.
*Often companies are only looking for director candidates who have already served on a board. However, be sure to ask for their perspective on other board-readiness attributes, like regular interaction with a corporate board, experience with an advisory role, or experience serving on a community or nonprofit board. These broader experiences open up the possibility of identifying potential board members who have a wider range of experiences and who are more likely to be from diverse backgrounds themselves. Diverse boards lead to better performance.
Next, now that I know how many and who, how do I recruit and interview directors?
- Take the process seriously.
- Source broadly.
- Interview many people–and by “interview,” I mean have a thoughtful, candid conversation.
- Check references.
- Have finalists “audition” by attending a board meeting
- Have no fear of rejecting potential board members.
- Finally, give the most gracious “dings” of your career when you tell the unsuccessful candidates that you’re going with someone else - shoot for a “blow them away” rejection.
The team dynamic is also critical to keep in mind when you’re adding a board member. This post about choosing board members,makes a good point:
“Select people who will get along with each other. The very best boards I am on are friendly social active groups. Serious business doesn’t have to be stilted and formal. It can and should be fun.”
We’ve covered a lot of ground in this post and you may be asking, “uh - is there a TLDR or cheatsheet?”
Drawing from his personal experience and anecdotes from dozens of client CEOs, Bolster’s CEO Matt Blumberg outlined these tried and true “Seven Habits of Highly Effective Boards.”
- Habit 1: Begin with the board in mind
- Habit 2: Be proactive about board recruiting
- Habit 3: Keep your board balanced using the Rule of 1s
- Habit 4: Cultivate mutual accountability and respect
- Habit 5: Drive intellectually honest discussions
- Habit 6: Lean in on strategy, lean out on tactics
- Habit 7: Think outside the box
At the end of the day, boards are there to support and direct a company. There’s no perfect formula, but by internalizing some of the lessons and tips outlined above, CEOs can cultivate strong, dynamic boards for their companies.
Want even more resources on building and scaling your board?
- Check out Bolster’s free e-book on How to Build Your Board and this infographic about board makeup
- Grab a copy of Startup Boards (see below to get a free copy)
- Sign up for a free Bolster client account to benchmark your board and browse our marketplace, which includes thousands of executives available for executive or board roles. Learn more and signup here and you’ll get a $1,000 credit as well as complimentary copies of Startup Boards, Startup CEO, and Startup CXO