Top 10 Reasons to Have a Board

 By Mary Cameron

Mary Cameron is the chair of Habitat for Humanity International, chair of a private lumber company and sits on two other boards. She has served on over 40 public, private, crown and not-for-profit boards. She’s also a former CEO of three different private companies and a former deputy minister.

One of the most often asked questions I get is “Why should I have a board?”. Let me share the top 10 reasons you should consider.

1. Boards add value: A study by BDC showed that companies with an advisory board performed 24% better in sales and 18% better in productivity (BDC, Study on Advisory Boards for SMEs, 2014). The study didn’t even delve into whether or not they were good advisory boards. These results are a  strong metric for the value boards add to a business — boards help a business succeed by offering much more than just oversight
2. Discipline and Accountability: Curiously, this is also often the biggest reason a CEO or owner does not want a board! A board introduces greater discipline and accountability to follow through on plans and projects. Most companies don't lack ideas, they lack follow-through. Being accountable to a board encourages this behavior.
3. Contacts and reputation: A company can augment its network and reach through its board members. I have experienced where a company can benefit from the reputation of its board members in making new contacts or seeking new clients. The assumption is that if a well known individual has agreed to let their name be associated with the company, the company is worthy of a deeper look. Directors can also give advice on who and how to approach new markets or companies. 
4. Insight: Board members often have knowledge that the company might not have. They can give advice based on their knowledge of the players or process that may be new territory for the company but is well known to the director. This knowledge can be invaluable to the company in developing its strategy and tactics.
5. Diversity: With careful design, a board can be an opportunity for the company to gain valuable diversity of thought and lived experiences. Management teams can be vulnerable to developing group think as they work so closely together. A board can bring a totally different perspective to discussions and can be an opportunity to present different points of view such as a customer voice, or a different nationality.
6. Clarifying Roles: Particularly in a family business, it can be tricky navigating the roles of founder and management from family roles. A board can ensure that discussions can be robust and complete without confusing the role the person plays in the business. An example of this is to hold separate shareholder meetings, even if the shareholder(s) is part of the management team.
7. Succession: A board can bring clarity to the critical issue of succession within a company. Although succession is critical to ongoing success, and its lack of planning can be a significant risk to the business, it is often not addressed because it’s uncomfortable for the CEO. A board can separate personality and family from performance, identifying the key requirements for the position, objectively looking at the existing gaps, and ensuring that development plans are in place. A board can also ensure that an emergency succession plan is in place to provide continuity and confidence in the event of a crisis with the CEO.
8. Risk management: Knowing business risks and using the opportunities afforded by being good at risk is mission critical to organizations, yet often risk is a perfunctory task at best. Boards can delve into risk and offer their experience in other organizations and industries to create a solid risk strategy.
9. Objectivity: A board can bring objectivity. Often management teams fall in love with their ideas and tend to ignore signs that indicate a weakness or a better opportunity. Cognitive dissonance can be a big player in the c suite. Boards can ask questions that invite analyses of key assumptions. Sometimes the long-term way of doing things is not the best way. It is almost always healthy to revisit basic assumptions and boards can encourage that.
10. Focus on strategy: Most companies have lots of great ideas. It's not lack of great ideas, but lack of focus that leads to failure. A board can keep the focus on the strategy, always asking: does this fit with our strategy? A great board and every member knows the strategy of the company and keeps it top of mind in analyzing new opportunities and implementations.  

Successfully contributing in any one of these ten areas often is sufficient reason to justify a board. But over time it is our experience that a board offers many if not all of these advantages.

So we ask owners who do not have a board, are these reasons compelling you to consider creating a board for your business?