Why should we establish a board anyway?

I get asked this question two or three times most months. Like any social institution, companies are complex and their success is subject to many variables. As far as I am aware, there are no cookie-cutter models that reliably deliver "point and shoot" type results. However, there are things company owners can do to increase the chance that their company will be successful. One of these is to establish a governance board. I'd like to suggest that a first board (or any board for that matter) can offer considerable value in three areas:

• First: strategy. Strategy is now widely (but not universally) accepted as a major role of the board. Owners are typically very busy, and they often can't see the wood for the trees. Also, many are not that good at generating or considering strategic options. A couple of carefully selected board members with well-developed strategy and critical thinking expertise can be really helpful to help understand the environment and set an appropriate course to navigate.
  
• Second: monitoring. Again, owners/shareholders are very busy! A board will help determine whether the company is performing to plan or not, and help sort out any remedial actions that may be required.
• Third: connections. Gaining access to resources (capital, skills, customers) can be a real challenge for smaller business owners. Directors can help in this regard, because most have a wide network of contacts and are happy to make introductions to secure access to much-needed resources.

These comments are offered in the context of owners of smaller companies becoming comfortable to "let go"—to open the financial records, to reveal the inner workings of the company, and to invite others to contribute to the generation of ideas and strategic options. These are all big hurdles for many owners. Yet they are hurdles which, if vaulted, can have big payoffs, through increased performance and a more sustainable future.

How does one get started down this path? Talking to people with experience is the best option in my opinion.  I am a strong advocate of professional bodies and organised networking groups. They are a good source of information, real-life stories, and, importantly, potential directors. Many of these groups schedule events where more experienced directors, researchers, business owners and CEOs to share case studies (good and bad), to help inform owners that might be considering an external board.

One final point. As an owner or shareholder you hold the control! You decide whether to establish a board or not, and you appoint the directors. And if things don't work as expected, you can (and should!) make changes.