Unlock board value: key strategies for strong governance

Why does having a strong Board of Directors matter?

Think of your board of directors as your dream team.

It’s not enough to have a great product and exceptional employees. You need advisors, mentors, and advocates who are willing to go to bat for your business. These individuals aren’t just filling seats. They’re the backbone of your company, offering advice, strategic guidance, and the odd reality check.

A strong board brings an extra layer of credibility and experience to your organization. As a result, new doors will open for you — like key partnerships, top talent, or critical funding.

But good corporate governance needs more than impressive names, expertise, and connections.

In their book Corporate Governance DNA, authors Don Hathaway and Maureen Jensen outline the key components for a strong board of directors: accountability, transparency, fairness, ethical behaviour, and responsibility.

“The board of director’s job is to be the representative of the members or owners of the corporation and to do it they must instill trust and confidence,” wrote Hathaway and Jensen. "We suggest that the truly competent director should be able to go beyond the consolidated financial statements to understand the numbers that tell the tale of how the organization operates, and especially how it spends or earns money".

Leaders can’t overlook the power of a trusted board; it’s a key ingredient for transitioning your startup to sustainable success. Still, it begs the question: what do I look for during recruitment?

Five criteria for building an effective board

Potential board members must bring tangible value to their role and, ultimately, to your business. Here are five strategies to help you build an impactful board of directors:

Outline your needs

Before you can start to assemble your board of directors, take the time to clearly define the specific skills, expertise, and experience your company needs.

For example, a tech startup looking to disrupt the e-commerce space may require expertise in digital marketing, e-commerce platforms, technology scalability, and strategic partnerships.

Think about the challenges and opportunities facing your business, as well as the strategic direction you’re aiming for.

Diverse perspectives

Diversity is a critical factor in driving innovation, creativity and decision-making in your boardroom. When you’re selecting board members, aim for diversity in all its forms, including gender, ethnicity, age, and professional background.

Say your startup specializes in AI solutions. You would want to recruit board members — women leaders, experts from different cultural backgrounds, academics, and industry professionals — who could bring a range of perspectives to discussions on topics like AI ethics and product development.

Leverage connections

A strong board of directors can provide access to valuable connections. Beyond relevant skills and experience, look for people who have extensive networks within your industry or related sectors. These connections can open doors to opportunities like strategic partnerships, securing funding, and accessing resources that may accelerate your company’s expansion.

Imagine you own a fintech startup developing a mobile payment app. You would want to recruit board members with networks in financial services who can help you access partnerships with banks and payment processors. These members can leverage their connections to make introductions and negotiate terms and partnerships that fit the long-term trajectory of your startup.

Ensure commitment

The expertise and networks of a strong board won’t matter if they don’t have the time to dedicate to the role. When choosing members, look for individuals who are willing to invest the time and effort needed to actively participate in board meetings. They should be prepared to have meaningful discussions and contribute to the strategic direction of your company.

For instance, board members who are passionate about a biotech company’s potential to revolutionize healthcare are willing to commit time and effort to support the company’s mission. Not only will these members actively participate in meetings, but they will likely be willing to advocate for the company within their networks.

Evaluate and refresh

Your business evolves and expands over time. To maintain its strength, your board of directors needs to evolve too. It’s good practice to regularly evaluate the performance and effectiveness of your board and identify any areas for improvement.

By regularly assessing its board’s performance and recognizing a need for expertise in market expansion, a company can recruit new members with relevant skills and refresh its board composition. This ensures alignment with evolving goals and fuels continued growth.

Build the best board for your organization

Selecting the right board members can be game-changing for your company. Each member comes to the table with one-of-a-kind skills, experiences, and perspectives.

Contact us

To learn more about building a valuable board of directors, contact Amrit Chahal, Senior Manager, Assurance, at [email protected].