Building Your Software Company’s Board - 5 Critical Tips
Software companies may be hesitant to establish their board. The very thought of a board can evoke images of long meetings, drawn-out deliberations and annoying second-guessing of management decisions.
That perspective, however, is largely a thing of the past. Today's smart companies see it differently. They see their boards as a group of trusted advisors that energize a growing company with experience, insight, and great connections.
To get the most out of a board, software companies should follow these important steps.
1. Determine the Type of Board You Need
Does the company need a formal decision-making body, or more of an advisory panel? The point is, software companies should not be stuck within the traditional model of company boards. A company board doesn't need to be a legally binding, formal entity. Many startups don't create formal boards until they are more established.
2. Know the Potential Benefits
Software companies should assemble their boards with the aim of leveraging the members' know-how and know-who to:
- Find clients and market opportunities
- Identify potential business partners
- Identify and recruit talented employees
- Cultivate the company's leadership team
Remember: it's not just about sitting back and receiving benefits. Building an effective board takes time and effort. Companies must be willing to work incredibly hard, overcome challenges, and prove that they merit the board members' hard-earned wisdom.
3. Choose the Right People
Too many companies build their boards around a collection of nameplates, which produces marginal results. The truth is, an effective board is built by selecting powerful, action-oriented advocates and champions. You need individuals who can produce serious results - those who understand it is a privilege to serve in this role and that it takes an enduring commitment to materialize a vision.
Effective board members are willing to leverage their know-how and know-who to hunt clients, partners, and talent for the organization. They also continuously cultivate the leadership skills of the founder and C-level executives.
Software companies should aim to appoint a complementary selection of board members with different skill-sets. They should seek people who understand the software industry, but also bring expertise in law, human resources, and marketing.
Young companies tend to put investors on their board. It's an acceptable practice, but they should also seek independent people without a financial stake in the company to offer a balanced perspective.
4. Practice Effective Meetings
Too many organizations struggle with filling their meeting agendas. Some managers worry that the board will overtake their leadership role. Others feel they must keep the board entertained with presentations.
Board meetings are for discussing the company's long-term objectives. Companies should keep the board focused on this goal by following these practices for effective meetings:
- Make sure each meeting has an expressed purpose
- Set an agenda and give items allotted times to avoid ongoing deliberations
- Emphasize that each item should end in a resolution
- Keep the presentations short and leave ample time for discussion
5. Set Time Limits for Board Appointments
Experts believe that a CEO taps 90 percent of a board member's knowledge after four years. When establishing a board, a company should set out the parameters so it refreshes over the years. It's healthy, and most importantly it brings a constant cycle of fresh perspective to your company.
Has your company established a board or advisory panel? What benefits has your company realized? Share your questions and thoughts in the comment on LinkedIn and subscribe to our blog for more articles like this.