QUESTION | How do I assemble a board of directors for my company?
RONY ISRAEL | Consulting partner, Business Development Bank of Canada
Far too few entrepreneurs use advisory boards and this is a big missed opportunity. Setting up an advisory board is easier than you might think, says Rony Israel, Senior Partner Consulting at Business Development Bank of Canada (BDC). Here’s how to go about it:
1. Determine your needs. Before seeking out potential candidates, do a quick SWOT analysis, which highlights your company's strengths and weaknesses, as well as the opportunities and threats it faces. That will make it easier to identify areas in which complementary skill sets are needed.
2. Build a short list of potential candidates for your advisory board. Besides business networks, many of the places entrepreneurs go in their private lives such as golf and tennis clubs or their kids' private school are frequented by the sort of high-calibre business executives, other entrepreneurs, university professors or professionals who would make ideal advisory board members. Don't forget the growing numbers of retired business executives. Look for people who are completely independent of the company, because they are the ones who will give you the true story.
3. Approach candidates and ask them to be part of your advisory board. When interviewing them, be transparent about your business needs, realities and challenges. Look for people with a genuine desire to help businesses such as yours grow.
4. Be disciplined. Once you’ve built your advisory board, make sure you meet regularly, for example, on a monthly or quarterly basis.
GEORGE SALAMIS | Chairman, Integra Gold Corp.
Choosing a board of directors can be daunting, especially for a small company. You don’t have a lot of seats to work with, but you want to make sure all the bases are covered.
Done right, composing a board can add deep knowledge and advisory ability to a company, protect present value and offer a vision for the future. Done wrong, it can lead to discord and inefficiency.
Here are five tips for junior firms assembling their board:
1. Go for big names: Integra recently appointed one of the country’s most respected gold-fund managers, Charles Oliver. He’d never sat on a board before, but brings deep knowledge of the gold sector and strong name recognition.
2. Be diverse: For Integra, it meant naming our first woman director, Petra Decher, who as vice-president of finance at Franco Nevada brings stellar skills to the board through her financial knowledge and experience at one of the world’s largest gold royalty companies. And she is fluent in French – crucial since our gold mine is in Quebec.
3. Choose directors who represent where your asset is. Integra is headquartered in Vancouver, but its mine is in Quebec. We appointed two Quebec directors for the skills they bring to a gold company and their knowledge of the cultural aspects of their native province and their contacts. I also grew up in and attended university in Quebec.
4. Choose directors to round out your company’s skills: If the mining company has deep technical clout, appoint directors with financial and public-market knowledge or other skills that it could use to round out the company’s experience. There’s little point in naming directors with the same skills as those inside the company.
5. Don’t choose yes men (or women): Your directors are not there to agree with everything the management team does. Their role is to advise, challenge, make management accountable and choose and executive strategies to make your company the best it can be.
TARA LANDES | President and founder, Bellrock
What is it? In for-profit organizations, a board of directors guides senior management. It provides broader industry knowledge than the management team possesses and focuses leadership on the mid- to long-term profitability. The board has a fiduciary duty to remain informed about company operations and work in the best interests of the corporation.
Develop the governance structure: Certain rules and structures must be put in place in advance of populating the board, and legal advice is a must. Some important factors to address include: the number of board members, terms, outside vs. inside directors, which committees should be struck (audit, compensation, etc), director compensation, and more.
Identify the skills that will help: In the old days, many boards were composed more of shareholder cronies than professional directors. Increasingly, companies have realized the value of a more professional approach. Identify the appropriate skills and expertise for the board. Every company has unique needs. Depending on what support you need, you might look for different types of experience, including: industry, audit, union negotiation, legal, foreign market entry, executive evaluation and compensation, etc. Once the positions have been identified, you can identify the people best suited to the roles.
Next week’s question: How do I write an effective corporate blog that generates traffic and stands out?
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