Organisational design | Mar 6

How to create an effective board for your business

Organisational design | Mar 6

How the right board structure and expertise can support SME growth and better decision-making

Dan Martin Small business journalist, event host

Reading Time 6 minutes

In the early stages of a business, the founder is the architect and builder. But as a company scales, the complexity of running it can outpace the vision of a single individual. This is where a high-functioning board can give you a competitive advantage.

Rather than just being a legal formality, a board can act as your business’ strategic engine and provide the expertise and guidance you need to grow.

For advice on building an effective board, we spoke to Emma Warren, who has decades of experience running her own businesses, being on boards, and advising entrepreneurs.

Finding the right board directors

When deciding on your board directors, think about the support you require and the experience you need to add to your business.

‘Is it a finance director to help you plan and ensure that you put in systems as a firm foundation for growth at an early stage?,’ Emma says. ‘Finance directors often have a good overall understanding of business so can help with much more than the accounts.

‘Alternatively, you might be looking for someone to lead on sales, marketing, or operations, so consider what their roles will look like and what they will take responsibility for.

‘Take into account that you will need to delegate some of your responsibilities, so what does that look like for you? Your role as the business grows is to manage yourself out of the day-to-day and move yourself into a more forward-thinking role, leading the business.

‘Don’t be afraid of recruiting someone who knows more than you do. It might make you feel a bit vulnerable, but if you can surround yourself with people who are experts in their respective fields, you will reap the rewards in business performance.

‘As well as solid operational skills, you want board members to have broader knowledge across their discipline, good connections with other people within their industry, and an interest in new developments in your market.’

If your aim is to build a business that you can eventually sell, Emma advises recruiting someone with lived experience of this at an early stage.

She says: ‘Founders often leave it until the last minute to prepare for the sale and it causes a huge tidal wave of work, whereas if you can embed a sale-ready way of working into your growth path, it will make things so much easier when it comes to sell.’

Lastly, Emma advises having diversity on your board.

‘You want people to be able to constructively bring different points of view to the table. If you just recruit people who think like you, you will ultimately limit the potential of the company. Diverse thinking is a great breeding ground for creativity and ultimately, growth.’

Once you’ve got a clear idea of what you are looking for, it’s time to start looking. To find the board directors, you have several options. You might already know someone suitable or you can use a specialist agency, like Nurole and Inclusive Boards. You can also place a job advert yourself on any job board or reach out through your broader network on platforms like LinkedIn.

Interview potential board members to make sure they are suitable, and as a director is a legal appointment, Emma recommends gettingthem to complete a one- to three-month period of paid (if applicable to the role) service so that you can both check that the fit is right before any real commitment.

Running an effective board meeting

Regular board meetings are crucial but they need to be effective. Rather than focusing on dealing with fiddly little operational issues, they should be about the running of the company and coming together as a team to move the business forward.

Here are Emma’s tips for running an effective board meeting:

Ensure the meeting will not be interrupted and is in a room where people can concentrate.
Set a start and end time that is appropriate to the topics needing to be covered
Have refreshments and a comfort break. You could also have some time for a general chat over some lunch to help build the team dynamics.
Have a very clear agenda that concentrates on strategic and high-level issues.
Each department should submit their top level KPIs and report progress against the business goals, as well as highlighting board level issues that need to be discussed.
Ensure reports are circulated prior to the meeting and ask people to read the papers in advance. Time shouldn’t be consumed with recounting information that’s already been circulated.
Discuss challenges that need board-level attention. For example, issues that are varying from the norm, external problems that might impact on the development of the business, and big projects that are under consideration.
Ensure actions are noted, stating who is responsible and their deadline. Circulate promptly after the meeting and request that these actions are completed prior to the next meeting, where possible, to avoid most of the meeting being taken up with reporting back on things that people should have done.

Measuring the effectiveness of your board

You need to monitor the effectiveness of your board to ensure it is delivering for your business. If it is not delivering, you may need to make changes to the directors. KPIs are a good barometer for how well the board translates strategic goals into operational actions.

How your board meetings operate will also contribute to their effectiveness.

Emma says: ‘An effective board is able to deal with good news but also able to debate and discuss tricky issues, sometimes heated, but never in a way that causes disruption and discord. An effective board isn’t all about agreement so disagreeing well is a strength and one that should be looked for.

‘The board and how it operates sets the tone and culture for the business so it’s important that board members are good ambassadors. They also need to be able to take controversial decisions back to their department, integrate, and work with them well to ensure that the positive culture remains.

‘The board should be concerned with creating value, so improvement over the long term is a good indicator of success, as is the happiness of key stakeholders and employees.

‘Lastly, does the room feel good when the board are together? Are the board members at ease with each other and eager to participate?’

At the end of some board meetings, you could have a quick discussion about what worked well and what didn’t. Peer review sessions, where board members work with each other to review their performance, can also be useful.

Emma concludes: ‘Building a board doesn’t have to be complicated or lengthy, but taking some time to ensure that there are compatible skills, open mindedness, and a team approach to board success will smooth the way considerably.’

Dan Martin Small business journalist, event host

Dan Martin is a freelance small business journalist and event/podcast host with over 20 years of experience. He is currently the editor of SMEWeb.com and the host of the Small Business Sessions, the podcast by business network Enterprise Nation which has run for nine series. Dan also works with Bristol Creative Industries, the not-for-profit organisation that supports the city’s creative sector.

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