Every company, from small businesses to massive corporations, should have a board of directors. For many startups still in the growth phase, however, the board of directors is all too often an afterthought. As a result, startups can move so fast that non-executive board members fall out of the loop between meetings.
It’s easy for startups to fall victim to a number of common traps that prevent them from running productive board meetings. In this article, we’ll discuss 4 best practices for avoiding these pitfalls and getting the most out of your startup board of directors.
1. Make Sure the Right People are in the Room
For starters, the right people need to be in the room during board of directors meetings in order for meaningful progress to be made. Problems can arise when you don’t have the right people on your board, or if certain members are consistently missing from meetings.
To achieve maximum productivity, most startup board of directors should have between three to five members. Too many and meetings will be too hard to schedule; too few and there’s little point in having the meeting at all.
The CEO of the startup is usually also the founder and the principal shareholder, which means that it makes sense for the CEO to also chair the board. However, smaller boards should not have multiple business insiders (or worse, family members). Staffing the board with outsiders to the business will bring in fresh perspectives and improve the board’s productivity and effectiveness.
2. Work to Improve Communication
As mentioned above, startups can move at the speed of light, and the board of directors can easily fall behind. If members of the board only play catch-up during meetings, then all of the time will be spent getting them up to speed on recent activity, rather than making meaningful decisions that impact the future of the business.
Instead, startups should seek to improve relationships among board members, so that formal meetings are just one channel of communication. When possible, board members should make an effort to get together over coffee, meet for meals, and network together at events. Also, don’t underestimate the power of informal communication channels such as text and email.
3. Stick to a Schedule
Members of the board are typically busy people, so you want to make sure that scheduling meetings is a smooth and straightforward process. Schedule meetings as far in advance as possible—ideally up to one year in advance so that your board can plan accordingly.
In addition, for maximum productivity, members of the board should receive the meeting agenda and materials a few days in advance so they are familiar with the content being discussed. This will make it easier to run an efficient meeting and ensure that there's time for each item on the agenda.
If confidential company information is going to be shared with your board, make sure your documents and presentation materials are stored and distributed using a virtual data room or another secure document sharing tool. Features like multi-factor authentication add additional layers of security to protect against cyber attacks and keep your confidential company information safe.
4. Have a Clear Plan for the Meeting
To make things predictable and easy for everyone in the room, nearly all board of directors meetings should follow a similar structure:
A general business update from the CEO about the state of the business since the previous meeting. This part should be heavy on facts, figures, and statistics that help board members understand how the business is progressing.
Next, an in-depth strategic discussion about the CEO’s briefing by all members of the board.
After this discussion, any legal decisions or votes should be discussed and made at this time.
The non-executive members of the board should be able to freely discuss issues without the presence of the CEO or other company executives.
Finally, the meeting concludes with a social event such as lunch or dinner.