I had the privilege of speaking to the Entrepreneurs Organization DC Chapter (http://eoaccess.eonetwork.org/DC/Pages/default.aspx) this summer at their annual retreat on how to build an advisory dream team.
Constructing this presentation gave me the opportunity to map out the process I followed over one year to build my dream team, which has been instrumental in re-shaping my business, improving profitability, implementing key processes, and ensuring I have the right people in the right positions. It's also given me a level of accountability I did not have prior to implementing it.
I'm going to summarize the steps I followed, but this is in no way an exhaustive description of the intricacies of the process. Still, it should provide you a general framework for how to go about selecting, compensating, implementing, integrating, and leveraging a Board of Advisers.
There are many reasons that companies implement Boards:
- CEOs don’t know all of the answers
- CEOs find that it’s lonely at the top – they need a peer group that gets what they are experiencing
- The business is stuck
- The CEO finds himself in uncharted waters
- It’s necessary to fill in gaps or skills missing in the company that the CEO can’t afford to fill with full-time employees
- Open doors for business development
In addition, a Board builds credibility and very specific knowledge in highly specialized areas.
BEGINNING THE PROCESS
For me, the Board creation process started about 15 months ago, when I was having breakfast with two partners from our law firm who are close advisers. I was discussing with them how I would like to implement a Board, but I was in the “I-don’t-know-what-I-don’t-know quadrant.”
I had no idea who I should have on my Board, what I expected them to do, how I should compensate them, or how to hold a Board meeting. I was in completely foreign, uncharted territory. But I knew I needed and wanted a Board. I had a vision of what it would look like and what it would accomplish. I just had to find the right people and get it in place.
My strategic advisers from our law firm helped to outline what a Board can do for me, and for Information Experts.
INTERVIEWING PROSPECTS
A Board is an extension of your company, of you, and of your Brand. Everyone that is affiliated with your company – your customers, your employees, your partners, your Board members – all reflect your Brand.
I interviewed about 25 prospects for my Board. I know that seems like a lot of people – because it is.
But this was a really important decision, as I will be relying on these people to help me shape my firm and reach my goals. I ask a lot of questions, I try to always be pushing the ball forward, and I needed people who were OK with that pace. I needed to have people in place that were on board (literally) with my plan, and in line with where I wanted to go – or people that would be able to tell me I needed to re-evaluate my path.
I talked with other business owners, retired government executives, and advisers. I met with people in many different fields… government, non-profit, and commercial, retired, active, people who have sold their businesses and are only interested in serving on boards, lawyers, accountants, and bankers.
Things to consider:
- Relevant experience (industry, their business size, working with companies with similar competencies or designations (8a, SDVOB, HUB, etc.)
- Their experience with serving on Boards – who do they serve; conflict of interests?
- Recommendations from third parties
- Their expected compensation
- Their availability
- Their value they bring to your specific company
- How they will integrate into your culture
- Their willingness to help outside of meetings – how available are they?
- Their willingness to be integrated into the organization – attend company functions, support other key personnel
- Their willingness to introduce you to other strategic supporters
- What you need at this moment in time… a Board is a work in progress and isn’t static.
- Your gut feel
SELECTING YOUR BOARD
Once you’ve taken the time to meet with prospects and have completed your due diligence, it’s time to narrow the pool to no more than 8 candidates. Initially, I selected 6 candidates for my Board but since implementing it, I added one additional member.
From that number, you may even narrow it down. A Board is a changing entity that depends on what your company needs at any given time. Seasoned Board members know that their tenure is a temporary position, which is why it’s best to put in place short-term agreements (no more than a year at a time).
Before selecting, have a clearly defined plan of what you need from your Board as a whole. Do you need to focus on building your pipeline? Do you need access to certain people or contracts in a specific agency? Are you trying to break into a new market or sector within the government? Are you hitting another stage of growth and need to upgrade your accounting system or financial processes?
Look for Board members that have taken other firms through this transition.
Especially as a company shifts from the entrepreneurial, grass-roots, bootstrapping model to more of a process-oriented firm, advisers can be especially helpful in helping to adapt the necessary processes.
COMPENSATING YOUR BOARD
I solicited a lot of input from my Board members directly, from other advisors, and from other business owners about how to compensate my Board.
As someone who has bootstrapped her firm and has built it with a lot of blood, sweat, and tears, I’m reluctant to hand over any of it to others who haven’t contributed to our success or haven’t experienced the pain I’ve experienced.
At the same time, I recognize that their time, experience, and reputation is very valuable, and if leveraged correctly, can make a quantifiable impact on your bottom line. Compensation can also depend on the size of your firm.
IMPLEMENTING YOUR BOARD
Any change makes a ripple effect. If you stick a thermometer into a glass of water to measure the temperature, the act of inserting the thermometer actually changes the temperature. This change principle applies to organizations too. The smallest change can bring about large ripples.
Bringing in one new employee changes the dynamics between other employees, and can reset expectations. When an employee leaves, there’s a temporary void in both the work load and the employee interaction that has to re-adjust.
Bringing on a Board, even though it is technically external, also affects the company because employees know that the Board is specifically in place to bring about change.
This is why, prior to officially introducing the Board, the CEO should communicate the Board initiative to the organization, and with complete transparency, explain why they are going down this path. The communications strategy behind this endeavor is critical. People need to know that the Board isn’t in place to evaluate jobs or positions, or that the CEO is taking a step back from day-to-day involvement and turning over the reins.
From the moment the CEO decides to venture down this path, they should share the plans with the organization. As they go through the process, they should keep the company informed of progress: who they are interviewing, how the interviews are going, decisions that are made (and why).
At the initial meeting, all employees should have the opportunity to meet the Board, and the executive team should have the option of attending all of the meeting, or at the very least the part where there functional areas are discussed.
I’m a transparent, communications-focused leader, so I choose to have my meetings on site at our office. It’s important to me that the organization see what we are doing, and if interested, they can step in to participate. Acquiring buy-in and trust from your company as you navigate growth and change is essential.
INTEGRATING THE BOARD INTO YOUR ORGANIZATION
A lot of business owners that bring on a Board don’t extend the Board past themselves. The Board isn’t in place just to improve the CEO’s performance; it’s in place to improve the organization’s performance, and the performance of the entire leadership team.
A Board is a perfect way to provide mentorship to your leadership team, and to give them access to the skills, knowledge, and resources they need to do their jobs well. If you’ve assigned accountability and ownership to your leadership team, then you are on the hook to be the bridge between what they have and what they need. A Board is one more tool in your toolbox you can use to set them up for success. It’s also a differentiating component of a recruitment strategy, and is a strong retention tool.
So how do you bring them in?
Beyond the first Board meeting, you take the initiative to set up follow-up meetings between specific Board members and the people with whom they align best in your organization.
As the CEO, I have the vision of what we need to go from Point A to Point B. I know who in my organization owns what, as it relates to my vision. My role in all of this is to articulate the vision, clarify the difference between my current state and desired state, and pair up the people to make it all happen.
Being able to recognize where I need support, and more importantly, being able to bring that support into the organization, reassures everyone in the company that we have a clear line of sight on where we are going, and that it’s OK to not have all of the answers internally. Most small businesses don’t have all of the answers internally. But it’s those firms that are open to direction from others that are able to grow.
We also keep the Board integrated by inviting them to all-hands meetings, monthly celebratory luncheons, and our annual holiday party. We keep them in the loop on developments within the firm – both good and not-so-good.
Continuous engagement is the key to integration.
SUMMARY
So these are my five steps for building an advisory dream team - Interviewing Selecting, Compensating, Implementing, and Integrating. I know this was a lot of information to throw at you in a column... and this was the condensed version of my presentation. As the owner of a small business that continues to experience growth spurts, I can't over-emphasize how critical my Board has been to me. They have been a lifeline in many ways.
Invest the time, energy, and money to build and implement a Board. It will be one of the smartest strategic decisions you will make.
I'm available for questions or guidance... email me at mlevin@informationexperts.com.
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