Controlling your Board
• 25 Jan 22
A business-owner’s relationship with their board of directors can often be a strained one, but maintaining control of the company is critical for its success. When hardworking, opinionated, goal-driven people are put together to make decisions, it is inevitable for varying ideas to emerge. So, as the leader of your company, how is it possible to keep disagreements from escalating into conflicts that may threaten the company’s progression? Let’s take a look at some of the best methods to maintain control of your company’s board.
Founders or CEO’s are often thrown in at the deep-end when it comes to people-managing within their companies. Many are used to working on their own and making all the decisions solo - but as the company grows, structural changes are bound to take place. One of these changes is the implementation of a board of directors made up of investors and shareholders who all have interests in the company.
This dynamic can often leave the CEO feeling confused as to how the board should be managed, while trying to stay ahead of business operations and taking charge of the decision-making process. There are a few basic steps to consider when working out a strategy for keeping a steady hand on the company board.
Selecting fitting board members
A seemingly obvious step, selecting board members is a crucial stage in setting up the board structure. However, selecting the most fitting members for your board is perhaps even more significant. Ideally, selecting investors and shareholders to generate funds for your business should be about more than just the money, but also about what they are able to contribute toward the success of the company.
It is advisable to select board members who are experts in their field, can add value to the company, and who are completely in-tune with your vision for the company. Seek to fill the board with people of different skill-sets and expertise (think marketing, finance, investment) to create a diverse and professional group of people who are not only able to contribute to the company’s success, but who can act as advisors when necessary.
In addition - by curating a board of efficient and credible members, your company will instantly be recognised as a credible organisation.
Election of chairperson
The chairperson of the board, also known as a chairman or chairwoman, is an important position of leadership who is elected by the board itself and serves a specified tenure. The role of a chairperson is to preside over board meetings, ensure that business is conducted in an orderly manner and help the board reach an amicable agreement. Working closely with the CEO, the chairperson should be selected for their professionalism, leadership skills, the ability to remain impartial and the ability to ensure the smooth flow of all board communications.
When it comes to making significant business decisions, the board will have a considerable say as to how the decision will go. How the power of voting is distributed amongst board members should therefore be carefully measured. Consider the size of your board against the size and scale of your company – does it make sense? Who will have superior voting rights? Will certain investors have more sway? Consulting with legal advisors will help you understand how voting power can be retained by determining a board structure best suited for the company.
Effective Board Meetings
Take control of board meetings, remain confident and clear in your goals and vision and solidify your status as the leader. Organized, efficient and concise meetings are the best way to reach your board members with a message while providing ample opportunity for discussion and debate. Time management is key. Nobody wants to sit in a meeting for hours with someone repeating the same thing over and over. Streamline meetings and stick to an effective agenda with the help of the chairperson.
A key aspect of retaining control over the board, as well as the cornerstone of a great working relationship, is an open-communication policy. By setting out expectations and clearly outlining the roles and commitments to which every board member must adhere, there is little room for confusion, misunderstanding and conflict. By keeping communication regulated and clear, everyone is on the same page and the end goal can be reached without divergence.
Remember that a board is made up of different people with varying backgrounds and expertise – communication is the key medium through which all members are able to understand one another and become aware of one another’s goals, values and business interests.
Network and Build Relationships
An important aspect of being a good leader and business-owner is taking advantage of any opportunity to develop unique working-relationships with board members and networking with board members’ connections. You never know when you could be talking to a new potential client or partner and the further news is spread about your company – the better! Remember to keep a close eye on the legal aspects of such conversations (regarding confidentiality) and to keep matters of personal business operations close to the chest. Some companies have even implemented a process where board members must introduce the company to a specific number of contacts as part of their board duties.
Concerning financial matters, you should pay close attention to the following and settle all such matters with the help of a legal professional before an agreement is entered into with members of the board:
- Valuation and pool allocations
- How much investors will receive from liquidity
- Staying in control of when you want to sell the business
When it comes to legal basics, it can seem overwhelming at first. But, it doesn’t have to be. GLS offers a host of free Startup resources to help set you on your way. You can also browse our list of over 200 Legal Templates and Tools, to choose the products your Startup needs at each critical stage of business.
We also offer a wide range of subscription based Legal Support Plans created specifically for Startups who want a 360 degree service in creating their own virtual legal dept.
*The above content does not constitute, nor is it offered as, legal advice of any kind. GLS Solutions Pte Ltd is not a law firm and any support provided pursuant to this entity is not regulated legal advice or legal opinion.