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Corporate Board Journey

Are You Thinking of Creating an Advisory Board?

I’m often asked about whether an emerging company should create an Advisory Board versus forming a governance fiduciary board. My response to entrepreneurs thinking of creating an Advisory Board is to be strategic in the formation of your Advisory Board.

An Advisory Board is not a Board of Directors with legal and fiduciary responsibilities. In contrast, an Advisory Board does not have any formal legal responsibilities and liabilities. Rather, an Advisory Board is created by the CEO of the company to get advice and support.

Over the years I have been invited to serve on Advisory Boards & Councils and have enjoyed providing strategic advice and guidance. More recently, I had the opportunity to create an Advisory Board for Women Get On Board, consisting of members with experience and connections in governance, law, investment banking, accounting, financial services, corporate finance, mergers and acquisitions, professional development, and media. Thank you all for your commitment and support to help us fulfill our mandate to connect, promote and empower women to corporate boards.

Five key strategic considerations when creating an Advisory Board:

  1. What is the purpose of this Advisory Board?

Usually an emerging company creates an Advisory Board to augment the talent on the leadership team with accomplished and connected business leaders. These business leaders are thought leaders, connectors and influencers that will use their network to make connections and provide strategic guidance and expertise to help accelerate growth, manage risk and enhance operational performance.

  1. Who do you want to invite on your Advisory Board and what is the value they will add?

First of all, you will want to prepare a skills matrix to identify the skills/expertise you need on your Advisory Board. You may want to bring in business leaders who have skills/expertise in areas like Digital Media, Private Equity & Venture Capital M&A, Capital Markets, IT, Sales and Marketing, as well as knowledge of the industry. It also helpful for prospective Advisory Board members, know the company they keep!

  1. How would you compensate your Advisory Board members?

If you are an emerging company, cash is king. You can certainly grant some form of stock options or equity to the Advisory Board for their time and their network. Or maybe it is about these business leaders paying it forward and helping an emerging company with its strategic planning, access to capital and customer introductions.

  1. Should there be term limits and is there a succession plan?

It is important when you ask someone to join your Advisory Board to define the expectation of their time commitment. Most Advisory Boards that I have been involved with typically have a 2 to 3-year term and meet 3 to 4 times a year in person. Sometimes there is a sub-committee that you will be asked to serve on, and occasionally there will be calls with the CEO on as-needed basis.

As you build your Advisory Board the skills/expertise you need in the early formation of your emerging company may be different as you grow. Be mindful of your succession plan for renewal of your Advisory Board members.

  1. What is the mandate of the Advisory Board?

Do you have a terms of reference or a mandate for the Advisory Board that describes the following items?

Expectation – What is the expectation of the role of your Advisory Board members. Is it to provide strategic guidance, for introductions, or to attend meetings?

Time Commitment – Is there a meeting schedule? How often will you meet?

Term Limits – How long is the term?

Compensation Terms – Is it a “pay it forward” or are there stock options or some form of equity, or a retainer?

Marketing – Will you be showcasing your Advisory Board members on your website and other marketing materials?

Once you have thought through these five key strategic considerations on creating an Advisory Board, it is really up to the entrepreneur to engage members of their Advisory Board. The more engaged your Advisory Board members are the more they can help you grow your emerging company!

How to Prepare for Corporate Board Roles

The first step in getting prepared to lead and serve on a corporate board is to make a plan. As, I’ve written about before, getting board-ready is a journey. A journey where you need to be realistic in your skills, experience and value that you bring to a corporate board while acknowledging that there are lots of qualified corporate directors looking for corporate board opportunities.

I’m often asked how to begin a corporate board journey. And my best advice is to ask yourself these 10 questions to help you prepare yourself to lead and serve on a corporate board:

10 Board-Ready Questions

  1. Do you have a minimum of 10 to 15 years of experience in a senior executive role in the public, private, crown or not‐for‐profit sectors?
  2. Are you prepared to commit at least 200 to 300 hours per year to a corporate board role?
  3. Do you have the support of your own Board of Directors and/or senior executives to serve on a board?
  4. Do you have a formal governance certification or designation (C. Dir or ICD.D) from the Directors College or the Institute of Corporate Directors?
  5. Have you ever served on a board, not‐for‐profit or for profit?
  6. Are you a team player that understands the dynamics of boards is one of the most critical components of good governance?
  7. Do you fully understand the role, responsibility and liability of a corporate director?
  8. Do you understand the difference between a board of directors role versus a management role?
  9. Do you have financial acumen—can you read and understand financial statements?
  10. Do you have experience in critical areas in our changing world such as Risk Management, International Markets, M&A, Cyber Security, Digital Media, Big Data, etc.?

To help you begin your board journey, Women Get On Board has two upcoming workshops; “How to prepare yourself for Board roles” on November 2, 2016 and “How to get yourself on a Board” on December 7, 2016.

Hope you can join us!

Understanding Your Role on a Board

Originally posted on September 15, 2015.

There are two roles you must play on a Board, one is Oversight and the other is Value-add.  I will highlight both roles with an extract from a chapter that I co-authored with Donna Price in 2008’s Entrepreneurial Effect by James Bowen and Glenn Cheriton, titled Corporate Governance-Directors of Emerging Companies.

(To promote understanding of a director’s role on a board and how to prepare for board opportunities, I am again co-facilitating Women Get On Board’s Getting Board-ready workshops from October to December 2016. Learn more about them here: http://womengetonboard.ca/workshops/.  Hope to see you there!)

The Oversight role on a Board

“The primary responsibility of directors is to oversee the management of the business and affairs of a corporation. This is referred to as an oversight duty. As a general matter, a business corporation’s objective in conducting business is to create and increase shareholder value. To this end, in addition to performing an oversight duty, boards also perform a value-added role. Decision-making generally involves developing corporate policy and strategic goals with management and taking actions on specific matters related to those policies and goals. Other matters, such as changes in the charter documents, election of officers, (and other matters referred to above), require board action (and sometimes shareholder action) as a matter of law.

All directors must understand that decision-making and oversight responsibilities come from prescribed standards of duty and conduct.

The corporate statutes impose two principal duties on directors: A fiduciary duty and a duty of care. As fiduciaries, directors have an obligation to act honestly and in good faith with a view to the best interests of the corporation.

As a director, you must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. This is known as the duty of care. In discharging the duty of care, a director must be concerned about process at least as much as, and perhaps more than, the actual decision taken. The duty of care underscores the need to implement corporate governance procedures to guide the board in decision-making. This means that pre-meeting, meeting and post-meeting practices should be oriented to providing the right information within a timeframe that will permit diligent discussion and decision. If a board makes a decision that may be contentious from a business perspective, provided the board gave sufficient thought and consideration to the decisions and were otherwise diligent, it will not normally be criticized. This is sometimes referred to as the “business judgment rule” and generally speaking, courts will not substitute court judgment for the business judgment of the board.”

The Value-Add Role on a Board

“In the formative years of an emerging company, the director’s role is more often weighted to a value-add role and as the company matures the role becomes more weighted to an oversight role.

Keeping in mind that the overall role of the board is to maximize shareholder value, directors also provide a level of insight, business acumen and personal network that extends beyond the company’s management team. These are some of the components that contribute to a director’s value-added performance.

The collective board should have sufficient industry knowledge and domain expertise (such as technical, operational or governance) in order to add value to board decisions and strategic priorities. Paramount to their duties, directors must select and oversee the CEO and monitor company performance. A value-added board should provide insight, advice and support to the CEO and management on key decisions and issues confronting the emerging company. Caution: “Nose in, Fingers out!” Boards must balance being too engaged in the day-to-day operations, with performing an oversight role.”

Women Get On Board presents Getting Board-Ready Workshops

These workshops help women gain insights and learn about the skills they need to prepare for board opportunities. Each half-day workshop will be facilitated by corporate directors and governance experts.

Understanding your role on a Board,  Wednesday, October 5, 2016; http://bit.ly/WorkshopOct5

How to prepare yourself for Board Roles, Wednesday, November 2, 2016; http://bit.ly/WorkshopNov2

How to get yourself on a Board, Wednesday, December 7, 2016; http://bit.ly/WorkshopDec7

Top 10 Tips to Help You in Your Journey to a Corporate Board

Being a Corporate Director is much different than being an executive. A Corporate Director’s role is one of oversight whereas an executive’s role is to manage day-to-day operations. Getting yourself board-ready is a journey where you need to be realistic in your skills, experience and value you bring to a board. You also need to be mindful that it is a very competitive marketplace. There is an over-supply of qualified Corporate Directors for a limited supply of available corporate board seats.

As a Corporate Director and co-founder of Women Get On Board, my goal is to help executives make that transition effectively. This is why I want to share my top 10 tips to help you in your journey to a corporate board.

  1. Be fearless — use your confidence to embrace change.
    ~
    Be independent minded and stand up for what you believe in.
    ~Do the right thing and be ethical in your decisions.
    ~Have courage, be brave, be decisive and be determined.
  1. Plan your journey, set goals and plan the path to your success.
    ~
    Be aspirational in your goals. What do you have a strong desire, longing, aim or ambition for.
    ~Think outside your comfort zone. Where do you want to be in 5 years, 10 years or maybe even 20 years from today?
    ~Tell your inner circle about your journey, goals and/or plans for your future.
  1. Be curious — explore new opportunities and solve problems.
    ~
    Don’t be afraid to ask questions; seek to understand.
    ~Look for ways to re-invent yourself.
    ~Change is good, change is inevitable, so make change part of your life.
  1. Get involved in your community.
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    Seek out not-for-profit board opportunities.
    ~Volunteer for a cause that you care about.
    ~You will meet new people outside of your current business circle that you can help make a difference. 
  1. Continuous learning — invest in your professional development.
    ~
    As professionals we have continuing professional development requirements…go beyond your requirements.
    ~Mastery =10,000 hours in a particular skill/expertise etc.
    ~Knowledge is power, so keep learning!
  1. Be your authentic self. (From The Four Agreements by Don Miguel Ruiz)
    ~“Be Impeccable with your Word.”
    ~“Don’t take anything Personal.”
    ~“Don’t Make Assumptions.”
    ~“Always do your Best.”
  1. Network, network, network.
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    Go to events that matter to you and meet new people.
    ~Invite someone new out to lunch or coffee.
    ~Ask for introductions.
  1. Be visible — speak up and stand out.
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    Be a thought leader; post your blogs, presentations and articles on social media.
    ~Speak up/comment on topics you care about or have expertise on.
    ~Take on leadership roles.
  1. Seek out mentors and sponsors.
    ~
    Look for a mentor outside of your organization. Find someone who inspires you.
    ~Become a mentor to others. You will learn a lot from them!
    ~Seek out a sponsor. Look for someone who will make introductions for you.
  1. Embrace and use social media to promote yourself.
    ~Enhance your profile on LinkedIn.
    ~Be active, thoughtful and relevant in your social media.
    ~Leverage your LinkedIn to attract new business, speaking and career opportunities.

If you would like more information and tips on how to prepare yourself for board roles, please visit Women Get On Board for information on the 2016 Getting Board-ready workshops. The purpose of the workshops is to help women gain insights and learn about the skills they need to prepare for board opportunities. These half-day workshops will be facilitated by corporate directors and governance experts. They will share their experiences to empower women to become more confident in order to lead and serve on boards.