A company’s Board of Directors is in essence your business’s governing body. They work for the company, are responsible for the company, and are there to provide the company with advice and guidance.
The decisions your board makes should always be in the company’s best interests, and provided you have recruited the right members for your board this will be the case.
However, the more skilled your board is, the better informed they are and the better decisions they can make. We explore here five tips for helping you improve the skills of your board of directors…
1. Train your board
We might be biased, but firstly a little training can make a big difference to the performance of a board. Regulations can and do change regularly, and keeping abreast of developments is important.
Few directors formally have any training behind them when they join a board anyway, so even if your board members are completely up to date when they join your board (unlikely) they will undoubtedly need a refresher before too long. Investing in training for your board members does not have to be costly, and you can reap great benefits of having a well educated board as a result.
2. Analyse your board’s skills
There are several skills which are preferable for a board member to have. Some of your board may have all of them, some a few and some very little. Even if they are very experienced in their field or industry this does not automatically give them the skills they need to be an expert board member.
We suggest conducting a skills analysis of your board to ascertain:
- Which directors understand the general duties and liabilities of being a director?
- Which directors lack experience?
- Which directors carry out their role to the required standard?
- Which directors have stood on your Board for too long?
3. Benchmark against others
Using others to benchmark against can be a valuable exercise – it can be difficult to see objectively what your board is doing well or otherwise if you yourself are too close to the action.
One way to learn about others is to talk to an equivalent director in another company. Ask them what lessons they have learned, both individually and as a board, and ask them what their advice would be for you.
You can choose to take this advice or not, it may not be relevant to you and your business, but with the more people you speak to a common theme is likely to appear, which can help inform your future decisions.
Another way to gain knowledge is to find a non-executive director or mentor to help you that you go to on a regular basis. The advantage of this is over time they will have a more informed knowledge of your business and can therefore share advice specifically to help you.
4. Evaluate your Chair
If you have a Chair of your board of directors, it is good practice to evaluate their role; being a good chairperson demands skills!
In the outset, a Chair is sometimes chosen out of convenience, and in time this can prove not to be a wise choice. When evaluating your chair’s role consider the following:
- Strengths and weaknesses - The shortcomings of the chairperson are often overlooked, particularly if he or she is also the major shareholder. Be mindful of whether they have the skills required and, if not, consider either offering training (see point one) or seek an alternative.
- Feedback - Your chairperson should receive regular feedback on what could be improved. You may want to consider using a non-exec to carry out a regular appraisal. The non-exec can carry out a 360 degree review by gathering feedback from the whole board.
- Outsourcing expertise - If you don’t have a non-exec, consider using an outside expert – for example all listed companies are required to have an external governance review every three years. This is a function of the listed company codes, but there is no reason why you can’t do this in a private company. The external scrutiny and expertise brought may benefit you in ways you can’t foresee right now, plus all boards should be looking to improve at all times.
5. Implement an Induction process
When you hire someone new to your company, it is likely they will go through an induction process. This helps the new member of the team embed into the company more quickly and effectively.
This is good practice for any new board members also. Put together an information pack about the company's operations, set up meetings with the key management, provide them with an overview of the company’s history and future goals. This will:
- Help with consistency
- Help find gaps in people's knowledge
- Make you look more professional
- Help new people learn about what you do and enable them to make a quicker impression at the meetings they participate in
Read our blog ’10 qualities of an ideal NED’
Try the Gov360 academy module on Director’s Duties