Have you been celebrating each victory?

Here comes another story.  Of course.  This one may be like one or more you have experienced in your company.  It is a story about focus upon the customer, first.  And about reinforcing the culture of the company in support of that important focus by senior management, and by all employees who see that leadership in action…

Some examples of celebration you can use

Growing companies give rise to many events that great managers will take advantage of to create and shape the culture of the company itself.  Each new plateau in revenue growth, each time a month’s orders hit a record, each large order from the sales department, all of these and more give rise to opportunities to celebrate publicly.  Everyone in a stressful corporate environment loves to pause and relish the latest victory.

My personal story of celebration

Each time our company would hit a new milestone, I would make a public announcement personally, then, with my payroll person in tow, walk the floors of the various company buildings handing out $50 or $100 bills to all employees as instant bonuses.  You wouldn’t believe how much people seemed to enjoy the boss’ visits.  The goodwill created and buzz that continued for days were well worth the small cost.

Everyone got the message: growth is great, and everyone is treated equally in celebrating.  Each distant or foreign office was included, although not often enough with personal delivery services.  This is different from “managing by walking around”, which requires no reason or structure other than the willingness to listen and learn from people on the line.

How about that bell on the wall?

[Email readers, continue here…] Many companies have a bell hung somewhere in or near the sales bull pen, rung each time a sale is consummated.  Managers should encourage everyone within the hearing of the bell to stop long enough to applaud, reinforcing the unanimity of approval for each new sale.

An event of extraordinary customer service

Victories that shape a company’s culture can take many forms.  Years ago, an emergency phone call was directed to my office from our distributor in Australia.  Their largest customer, Hamilton Island Resort, had just suffered a fire that destroyed the building containing their large minicomputer installation.  No-one was injured, and there was a backup from the night before stored in a safe location.  But there was no replacement machine in Australia, and each day that guests checked out without paying their bills amounted to a day where cash flow was at least temporarily reduced by at least $250,000, not a small amount as it accumulated.

Simultaneously, we had a new machine with identical specs on the shipping dock for a Florida installation at a property whose managers were pushing the company for an instant delivery.   I made the decision without pause to redirect the shipment to Australia that day.  Then I immediately called the CEO of the Florida customer to explain.  Not too happily, he acquiesced.

Everyone within the company knew of the problem and of our instant reaction to aid our customer, even in the light of pressure from the Florida customer now back in line for shipment.  We oversaw the successful installation in Australia the next day in a temporary building and our people helped key in data subsequent to the backup.

Customer first, always!

Everyone knew from management’s actions and their own efforts that the customer comes first, always.  This story has a second happy ending.  We engineered a rerouting of the Florida order a week later so that the computer to be shipped would be the 1,000th of its model.  Before packing it in its large shipping crate, we held a party in the shipping dock for all employees, with streamers and cake and the world’s largest greeting card – hundreds of sheets of continuous form computer paper, which every employee from software programmer to shipping clerk signed with a message of thanks and goodwill for the Florida customer’s sacrifice.  That week, we scored two great customer stories and more goodwill throughout the organization.  And most of all, we reinforced the culture of focusing all actions and activity on the needs of the customer.

Victories come in many shapes, sometimes when least expected.  Celebrate them all.

Facebooktwitterlinkedinrssyoutubemail
Posted in Depending upon others, Surrounding yourself with talent | Leave a comment

Here’s a rule for companies with outstanding loans

 

Here is one that is so important to the continued health of a growing company that it cannot be overstated. It’s a bit complex for novices. But hang in there as I explain a bit about accounting classification of assets and liabilities.

Differences between types of assets and liabilities

First, let’s be sure we know what is short in term and what is long in term.  Long term debt is taken on for the acquisition of fixed assets such as equipment, cars, facilities and acquisitions of companies or their assets.   Short term debt is often composed of accounts payable to the trade or employees for expenses, payroll liabilities, accrued but unpaid vacations, customer deposits, and the portions of any loans due to be repaid within one year.

How much can you borrow against company assets?

Asset-based financing is common for companies with accounts receivable and / or inventories.  There are numerous lenders engaged in this practice, including most business banks.  Typically, companies may arrange to borrow between 70% and 80% of those non-government receivables that have not aged past 60 days from invoice, up to a maximum amount, or “credit line”.

[Email readers, continue here… ]  Other companies have both the creditworthiness and relative size to be able to borrow from private and banking sources without collateral, with unsecured loans.  Many of these lines of credit require that the borrower “clean up the line” for one month out of every year, that is to be out of debt with the lender for that period to prove to the lender that the need for the cash is not permanent, used like a long-term loan.

How to get in trouble mixing cash use and loan classes:

Numerous companies have gotten into trouble by using the easy availability of these short-term lines of credit, meant for rising and falling working capital needs, to make payments upon long term obligations such as asset loan payments when due.  And worse, some even purchase assets such as equipment with money from short term loans.  Matching the term of a loan with the life of the asset is an important business principle.

The “coffin corner” to avoid in cash management

Receivables are assets for only 60 days for the purpose of these lines of credit, and the available line can be reduced automatically as receivables reduce with payments by customers or aging beyond 60 days.  We all expect new receivables to be added to replace these, but a cyclic business; a disruption in the general economy; a reduction in the company’s revenues would each contribute to a reduction in the amount available for such borrowing.

To avoid the coffin corner of an over-borrowed asset-based line with no cash for working capital, remember that short term borrowings such as these should never be used to pay any long-term obligations or to purchase fixed assets.

Facebooktwitterlinkedinrssyoutubemail
Posted in Protecting the business | 3 Comments

Have you made the mistake of hiring too soon?

Well, you may not be alone. Many executives and managers have made the mistake of using the financial and sales forecast to plan and execute hiring of new employees – so that they could be trained and up to speed when the demand arrives.

The balance between preparedness and cost

Although hiring early does add to overhead by bringing employees aboard before they

become economic contributors to the bottom line, there is much to be said about consistent or improved service quality by having trained employees already on the front line when the customers want and need them.

Perhaps it all depends upon how you want to deploy available cash during good times.  We’ll assume that you don’t have the freedom to do so when cash is tight.

Hiring when growth is steady or if unpredictable

So, there are periods in any economy or industry segment when growth seems steady and there are few warning flags ahead.  In such instances, it is much less risky for a company to execute its plans for spending in coordination with forecast revenues.

[Email readers, continue here…] But there are many more times in which the near-term future is far less predictable, and when early hiring decisions may be just the wrong move, reducing flexibility and reducing reserve resources.  It is during such more common times, that you should consider using temporary employees to fill demand as needed, even if brought aboard a bit early for pre-training.  And increasingly, there are off shore service providers able to contribute to production and service, expanding and contracting at will, with some sacrifice in control and sometimes in quality.

Your reputation with your employees at risk

Further, a company suffers in its reputation with its employees when hiring and firing in short cycles to meet short term needs, unless those brought aboard are hired as temporary or seasonal workers.  Every employee wants a stable work environment and does his or her best work in a culture of mutual trust as to continued service as a reward for good work.  Constant interruptions in the chain of command, changes within the ranks and threats of impending layoffs together combine to form one of the greatest impediments to efficiency and a strong corporate culture.

Facebooktwitterlinkedinrssyoutubemail
Posted in Growth!, Protecting the business | 1 Comment

So, what if you run out of money?

Money in the bank is like oil in the car.

Certainly, you have many ways you are pulled every day, both tactical and strategic. But when money is the issue, your time, energy and focus are drained from other important areas of your life or business.

Running out of money is not always synonymous with “going broke”.  Many great businesses in their growth periods find themselves stretched for cash.  If fixed expenses, especially payroll, are paid out before cash is received from services or shipments, the company is financing its growth with ever-increasing working capital needs. Without remaining availability from a bank line, many businesses are stretched to the limit just when they seem to be doing better than ever.  This is one interpretation of “It takes money to make money”, although that statement was probably created to describe new investment opportunities.

Speaking of which, those companies with cash in the bank and cash available are the ones to scoop up the bargains, from suppliers and in acquisitions especially during tough times.

And oil is a lubricant…

But the most important lesson to remember is that cash is the great lubricant for businesses.  Without at least a month’s working capital needs on hand in the form of cash, receivables that will be cash, or an untapped credit line as a fallback, you should worry over cash flow issues on a daily basis.  Any disruption to the tedium of daily activity from weather, disaster, revenues slowdown or product problems will stress the company infrastructure if there is not a cushion to use during such times.  Stress of this type always forces you or senior management to lose focus upon strategic issues and drop into day-to-day tactical mode.

[Email readers, continue here…]  I find it a great thrill to consult to companies and their senior management when they have plenty of “firepower” (extra cash beyond needs) for acquisitions and strategic initiatives.  It seems that the first subject that comes up in such assignments is the health of the competition.  Such bargains; so little time.

Cash and the value of your business

Running out of cash denigrates the very value of a business, reducing greatly any bargaining power with suppliers or acquirers.  A company that otherwise might be valued at twice book value, 1x revenues, or 10 times earnings will be valued at a lower amount by potential acquirers knowing that the company shareholders are in a tough position and management hungry for leverage and a little more sleep at night.

Never run out of money, even at the expense of slowing growth for a time.  A fast-growing but undercapitalized company is not highly valued in an acquisition.  For early stage businesses worrying over dilution when faced with an offer of more money than they need, the professional advice is most often to take the money and suffer the dilution because the money may not be available if needed later.

Cash is such a powerful inhibitor or driver of growth that management of the corporate cash is as important as strategic vision, and perhaps over time a good indication of the success of that vision to drive profits.

Facebooktwitterlinkedinrssyoutubemail
Posted in Hedging against downturns, Protecting the business | 2 Comments

The 18-month rule and a harrowing tale

It can take 18 months from initial concern about a critical employee to getting a replacement up to speed.

Of course, I’ll tell another harrowing story here. But first. an old friend, Dick Tanaka, gets credit for the 18-month rule.  He observed that the process we follow to be humane in our handling of under-performing employees, manage the risk of future lawsuit, finally then move to separate the employee, define the open position, recruit the candidate, train the new hire and count the new hire as up to speed in the job can take all of eighteen months.

The costs for a failed hire and underperformance

That is a shock in so many ways. First, the costs for under-performance are both tangible and intangible, with lost revenues, lost opportunities, lost savings and loss of productivity from low employee morale difficult to estimate.  There are those in the recruiting industry that have attempted to do so and depending upon the size of the company and the position replaced, seeming to settle upon astronomical lost costs that overwhelm most of our ability to understand.  All of us will admit that, looking back at a failed employee hire, the costs were well beyond the payroll cost for the individual.

How about senior managers no longer at speed?

Perhaps this is a good time to speak about senior managers that are well-entrenched in the organization but are under-performers because the organization has passed their ability or span of control.  It is important to note the trauma of separating an old friend or close associate, or even a family member.  There are few good rules for conduct in these instances, other than honesty in pointing out the problems, and doing everything possible to preserve the individual’s dignity.

A personal story illustrates the point too well

[Email readers, continue here…]   Early in the rapid growth phase of my computer software company, I hired an excellent, IBM-trained vice president of sales to further growth and begin our international expansion.  He did so with gusto, and for several years was directly responsible for our growth into a total of 29 countries, including establishment of six foreign subsidiaries.  Annual growth in revenues was between 50% and 100%, amazing and exhilarating.

But he had a habit of bellowing out at underperformers, bullying others to get his way, and doing so in ways that rubbed all other managers the wrong way as he dominated meetings, and made it difficult for others to contribute.  Surely a result more of his urban New York upbringing, I put up with these character traits as the cost for his amazing performance.  And you might guess that, as his superior, I did not experience any of the threats to my job or dignity that apparently all others did.

The confrontation that came out of nowhere

I received a call one day from one of my country managers, stating that he and all my senior managers would be at a meeting room in a nearby hotel the next evening at 7.00 PM, and that the vice president of sales, presently in the air traveling to the very country where the manager was to meet him, was not to be present.  I was shocked and disoriented, a CEO with no idea of the urgency of the situation that was developing, since there had been no warning.  Fourteen people, including the country managers and all the vice presidents, were to be there.

I immediately called an industrial psychologist I knew, asking him to be at my side during the meeting to listen and interpret the mood of the meeting.  (I have an industrial psychology educational background but could not count upon myself to be completely objective here, of course.)

Then the meeting no CEO would want to attend

We walked into the meeting at the appointed time.  Apparently, the meeting had been going for some hours.  Everyone but the sales VP was present as anticipated.  As the psychologist and I listened to one after another of these, my most senior talent minus one, describe the assaults to their very souls, the affronts to their self-respect, the hobbling of their ability to perform, I was overwhelmed.  There had been comments from some of these individuals in the past, but never voiced as an orchestra, and never with evidence so overwhelming and irrefutable.  As the presentations of each concluded, my senior-most VP stood and stated calmly that if I would not remove the affronting individual, each and every one of the people present had agreed to resign.  Now that’s an act of desperation or defiance rare, perhaps unique.

An industrial psychologist helps (me) the CEO

I asked for a few minutes to confer with my associate, the industrial psychologist.  You might guess that it took less than that few minutes.  As we returned to the room, I turned to the psychologist, the only third party in the room, and asked him to give the group his candid response to what he had heard.  As I recall, he stated quite clearly that in many instances he is hired to repair relationships at senior levels in companies with such problems, paying special attention to coaching and training the offender, sensitizing him or her to the traits probably not noticed in self.  But, he stated, as I recall, “This one is for the books.”  He had no advice other than to just do it and now.  Of course, I had come to the same conclusion, even though at least in the short term, sales growth would suffer.

How a difficult executive separation payed out

The rest of this story, if I took the time to tell it, would deal with the humanity of this next step, and retention of the dignity of a superior performer in all ways but one in his management abilities and in dealing with contemporaries and subordinates.  I recalled him immediately back to corporate headquarters from his landing in Asia, and fired him after discussing the reasons with care, negotiating a reasonable separation package.

The culture of the company thrived, and I could feel a collective sigh of relief from people even far below the level of senior management.  Although we had little contact after all the years, I remained friends with this superior performer to the day of his death years later.  He understood, acknowledged the personality trait that failed him as one that had haunted him in his past, and became part of the solution once he and I had all the facts on the table.

It is a story that is extreme, relies upon one fatal character trait, but in other ways probably could match one or more of your own stories to tell or someday to experience.

Facebooktwitterlinkedinrssyoutubemail
Posted in Depending upon others, Growth!, Protecting the business | 5 Comments

Entrepreneurs: Employment law is not on your side!

Small companies most often scrape by with borrowed or invested funds, doing everything possible to grow and prosper with limited resources.  So, it is like a punch in the gut when an employee makes a claim against the company for a perceived or actual but unintentional violation of a law or regulation.  Or when a former employee strikes out with a suit claiming discrimination for one of a thousand causes.

One story just keeps reverberating through my mind after several years of hearing it from a fellow CEO.  In brief, an employee with an alcohol problem that he took to work was fired after several warnings. He sued for age discrimination and was awarded $500,000 for his efforts.  Small company; outrageous outcome.

Almost all laws dealing with employment are designed to protect the employee, not the company. Minimum wage laws, workplace safety, independent contractor tests, minimum hours required for benefits, overtime rules, discrimination protections, worker compensation insurance requirements and more are examples of such laws.

[Email readers, continue here…] Notice that every poster that is required to be displayed in a company public area (usually the lunch room) is posted for the benefit of the employee to inform him or her of rights granted by law.  To most entrepreneurs, this often leads to an event whose resolution by a governmental agency or even a court seems unfair and illogical.  Issues that seem clearly based upon ineptitude morph into age or gender-related epic battles that most always end poorly.

So, my advice is simple.  Recognize the realities of the times; and do all possible to protect the company by documenting behavioral or skill related problems to the employee file.  Hold regular reviews for all your employees right to the top. (The chairman reviews the CEO, and if there is no separate chairperson, then the CEO should ask an outside board member to do so.)   Encourage reviewers to be accurate, not just polite, in documenting areas of concern.

This is not to counter my previous advice: “Fire fast, not last”, since every CEO should shoot for “A” class employees and not tolerate underperformers over time.  It is a balancing act, protecting the company while making sure all those who work there are “A” or “B” level contributors.

Facebooktwitterlinkedinrssyoutubemail
Posted in Protecting the business | Leave a comment

Insurance is always too expensive – until it’s needed.

I expect that you have a story about how insurance saved you lots of money in your past. As usual, I have a story to make your hair stand on end.

But first: here’s a fact. Business insurance is one of the more poorly managed mitigation of risk in small and many medium sized corporations, often because of failure to assign the responsibility to an individual or department, and sometimes just from the willingness to bet against the event and save cash.

Business package policies

Business package policies are inexpensive and comprehensive tools that should be contracted by all companies with any assets to measure and protect.  A typical beginning package for a small company costs about $4 thousand a year and covers several forms of liability for both premises and product as well as employee use of self-owned cars for work, theft, employee dishonesty and more.  There is usually a small amount of business interruption insurance in the standard package, and more protection can be added at a cost.

Here’s how to be truly scared

Reading the list of protections covered by a typical policy is frightening, since most of us never think of such risks. It is overwhelming to have them pointed out in one reading.  But watch out. The list of excluded protections is equally frightening for the same reason.  Perhaps that is why using a good agent is important. We do not think of these exclusions unless someone with experience points them out.

My story about an event that changed business insurance

I believe my former software firm was responsible for one such exclusion that used to be a standard part of such policies. (Sorry about that.)  With almost 250 employees, 26 of whom were application programmers, it was important to back up the work of these programmers each night, and an employee was tasked with just this each evening after midnight.

Each night’s backup would be carefully marked and the rotated between offsite and on-site locations in a series of steps so that backups of a day, two days, a week and a month were all available both on site and off site.

Did I fail to mention that for more than a year we never tested whether the backups contained good data?  It seems that a change in the operating system on the server we used for development was made that changed the way backups were cued, and our backup person was unaware of the procedural change needed to accommodate this.

The head crash heard round the world

Fast forward to the inevitable day of the massive head crash. I quickly heard of the problem and the fact that all 26 programmers were standing by waiting for the backup to be restored, expecting to lose the partial day’s work.

And the first backup from the night before was blank.  As was each subsequent backup, on-site and offsite.  Big OUCH!  It took weeks for the team to assemble code from various sources such as customer sites, beta test locations and demo machines.  (For you with programming knowledge: Lucky for us that it was interpretive not compiled code.) Then it took another several weeks for the programmers to come back up to speed rewriting patches and programs in a frustrating re-creation of weeks and more worth of previous work.

Turning to insurance to cover the expense

I tasked our accounting department with collecting and calculating the costs of the labor lost, which was the only real claim for business interruption to be made as customers were unaffected by the problem.  The cost came to well over $100,000, and a claim was filed with the business package insurer.

After a short negotiation and quick audit, the insurance company paid $108,000 to settle the claim.  The year was 1987.  So, that would make that insurance payout $232,000 today, accounting for inflation.

The Insurance company reacts

In the following year’s renewal policy, I noticed a new page in the exclusions section, excluding for the first-time data losses from failed backups, no matter what the cause or where the fault.

Either we were the first to make a significant claim under this previously covered portion of the policy or one of several that did so in that year. Either way, you have me to blame for one more of those exclusion pages that overwhelm such policies today.

And that is why insurance policies seem to add more exclusions each year.  Sorry about what may have been my contribution to list…

Facebooktwitterlinkedinrssyoutubemail
Posted in General, Protecting the business | 1 Comment

Any advice can be worthless, or worse.

Ever get bad advice? Sure. We all have in our past. Ever take that advice without question because the person giving it was an investor, a superior in rank, the chairperson of your board?  I’ll bet you have at least one story of bad advice taken and being bitten as a result.

As one illustration among many I can recall, let me tell you the story of the first investment made by a newly organized formal group of angel investors. Some of you can guess that name of the group. It was thrilling for these angels to find a young entrepreneur with an idea for a business that seemed so destined for greatness that the angels invested over $1 million on the condition that the group receive two board seats and one observer seat on the start-up’s board.  The young, eager entrepreneur immediately agreed, and the business was launched, well- funded and anticipating great profits.

As the business expanded into a second city and then planned expansion into a third, there was a rift that became evident between these angel board members, played out in front of the CEO.  The angels argued about whether the expansion was too quick, requiring additional money, or should be slower and bootstrapped with profits from the first city’s success.  Finally agreeing upon expansion at speed, the angels raised more money and encouraged the CEO to accelerate the expansion, which the CEO did with enthusiasm.  It did not take long for the company to again run out of money, and for the board to split over the next moves (since the first city continued to be profitable).

[Email readers, continue here…]  The angel investors could not raise the next, larger round to finance the shortfall and further expansion, putting the fragile young company at risk for following the advice of its board.  In the end, the company had to turn to a wealthy individual investor who took control of the corporation as his price for saving the company.  Look ahead only a short time, and the new major shareholder ran into trouble overleveraged with his real estate investments and defaulted on his funding promises.  But I digress.  Painfully.

Had the angel board members been able to agree upon a financeable strategy for growth, the company might have been immensely successful.   To put an ending to this story, the entrepreneur followed the suggestions of the new investor just as he had followed the angels, and accelerated quickly into more cities, again running out of cash.  And now you know that the wealthy investor in the meantime, could not make good on his promise to further fund the company, which found itself unable to meet its obligations and ultimately was shut down, causing a complete loss for all.  Bad advice taken by an enthusiastic and compliant young CEO was the root of the cause, compounded by circumstance.

By not putting up any argument and being completely compliant, the CEO ceded control of the company to outsiders who gave bad advice.

The lesson for any CEO or for any of us for that matter is to filter all advice through the strainer of good reason, taking that which seems reasonable and rejecting that which is wrong for ourselves or for the immediate time.  And, as I have learned from experience, if you perceive advice to be in error or against better judgement, form your arguments after a little thought and make your case with information to back it up if necessary.  Most of the time, the person on the other side of the table will see your side, feel your passion, and either agree or withdraw any objection.  Remember, passion and reason almost always win the day in these cases, even when facing a superior in the food chain.

Now you can tell your story…

Facebooktwitterlinkedinrssyoutubemail
Posted in Depending upon others, Protecting the business, Surrounding yourself with talent | 3 Comments

I won’t serve on a board without D&O insurance!

I’ve been sued as a board member too many times over the past twenty-five years of board service.  Five times. Does that shock you?  It does me.  Entrepreneurs blaming their board for failures of a fragile, early stage company.  Shareholders unhappy over the same loss, reaching out to sue every name available. Employees reaching out to anyone above to redress grievances.  In one case, an aggressive lawyer finding all the members of an LLC, and suing every member found.  Whew!

Whenever there are outside shareholders or note holders, or unhappy employees, and when there is a product in release, there is a chance, no matter how slight, of a lawsuit against members of the board as well as against the corporation itself.  Even if such a suit is completely without merit, the cost of defense and the risk of a negative outcome both hang over the company and the director.

Directors and Officers insurance (D&O) is meant to reduce that risk and provide for the legal defense of any such suit at the expense of the insurance company.  In that regard, even the lowest amount of D&O insurance available, $1 million, provides for legal defense costs to be covered.  The usual cost for such insurance is $4 to $6 thousand a year, with an extra $2 thousand for an additional million dollars of coverage.

[Email readers, continue here…]  Recently, insurance companies have added employment practice liability insurance (EPLI) to the package to address specifically the recently-increasing risk of employees suing for redress.  Given the increasing number of suits for sexual, racial, gender and other discrimination, this now seems logical and necessary.  So, add another $3 to $4 thousand to the policy cost.  Ouch!

More important than the cost is the provision of investment documents from sophisticated investors like VC’s and sophisticated angels requiring D&O insurance for the company at the time of funding.

Additionally, I have always insisted that a company CEO sign an indemnification agreement, which indemnifies the director in any event of a lawsuit using the full financial resources and staff capabilities of the company.  This may sound harsh, but in reality, the insurance obtained does this.  However if a policy lapses and is not renewed, and if the directors are not informed, this agreement forms an underlying defense backed by the corporation.  Unfortunately, there are times when early stage companies just run out of money and cannot renew their policies and therefore have little resources to pay lawyers for defense of claims.  And unfortunately, it is often during these stressful times that shareholders are angered by perceived or actual under-performance by founders and boards.

Over the many years of board service, before insisting upon this insurance requirement before service, I had been sued as a director several times, in no case covered under the umbrella of a D&O policy.  Although I won each of these rather spurious suits, the cost of defense in some of the cases was not reimbursed, and the time spent in helping the attorney prepare for the defense and in one case through to a several-day adjudication event, was not small.  As a result, I now insist upon D&O insurance for every board upon which I sit.  The backgrounds of these suits make for good stories – for another time.

Facebooktwitterlinkedinrssyoutubemail
Posted in Protecting the business | 6 Comments

How about your board members’ time commitments?

Expect a board member to give a meeting a month, emails and phone calls between.  Urgent issues require more of all.

Board members are usually busy people, often running other companies or serving on multiple boards.  Early stage boards usually meet once a month for two to a maximum of four hours, enough to ruin the rest of a day for those who travel even short distances.  In addition, most all board members freely receive phone calls and emails from the CEO during the month, all considered part of service.

There are times when board members are called upon to give extra-ordinary time to the corporation, such as interviewing candidates, strategic planning, recovery from a cash flow crisis or other urgent issues.  Most often these are freely given by board members.

You would probably cross a line if you ask a member of the board to consult to the company, spending considerable time with other employees regarding issues that might be handled by others than from a board.  Depending upon the board member, it is appropriate for you to offer a consulting fee for this time spent above the call of board duty.  Any such informal contracting of service should always be preceded with an agreement between the CEO and board member as to the amount to charge and estimate of time to be spent before further agreement is necessary.

[Email readers, continue here…] Do you expect your board members to be more involved that this?  Have you discussed this during a board meeting?  And would you want more from your chairperson?   How about asking a board member to spend time with one of your VP’s or directors?  All of these are great questions to clarify with your board.

So, now we’ve discussed the expectations that are the norms.  It’s your turn to make expectations clear and be sure there is agreement about these expectations.  Good luck!

 

Facebooktwitterlinkedinrssyoutubemail
Posted in Surrounding yourself with talent | Leave a comment