For weeks, we’ve highlighted both good and bad things about boards of directors for your company (or non-profit.) This week, let’s focus upon number one – aside from the requirements of boards to protect the company itself (not the shareholders.)
Normal functions of boards
Boards of directors fulfill numerous important functions, both legal and structural. Boards provide or see to it that there are resources for the company (especially money) to operate. The board selects, monitors, helps, and oversees compensation for the CEO. The board can replace an under-performing CEO. The board is responsible for approval of all deferred compensation for all employees at all levels, such as stock option grants, and is responsible for the vision and strategies for growth and protection of the corporate asset.
What should the CEO expect of his / her board?
The CEO has every right to expect his or her board to help with issues when asked, particularly when board members have associates, friends, or contacts that they believe would be able to help solve a problem or provide a service requested or needed by the CEO.
And now, that most important non-legal function
[Email readers, continue here…] We used to call these personal and business contacts that all board members possess collectively the “golden Rolodex,” but long since have had to replace the name since there is an entire generation of management unfamiliar with the circular Rolodex. (No, that is not the watch company, if you are one of those.) Board members each have a collection of associates who, because of their relationship to the board member, usually would be willing to help provide a solution to a problem when called upon.
Some board members have a wealth of great contacts
It is one of the most useful services some board members perform in any organization. Because of the value of these contacts to the board member, it is important that these contacts not be misused by the CEO, and that each offer is followed up with at least a first contact when a name is offered.
A CEO’s duty to respond to those offering golden contacts
Some of your board members will have and offer more relevant contacts than others, and you will soon learn the importance of keeping those board members in closer contact and better informed between meetings. The intangible resources they provide can easily lead to finding ways to reduce time and cost to market, to find valuable new employees, and to find new customers who will listen to your pitch because of their relationship with the board member.
How a contact’s relationship with your board member works
People you could not reach yourself are sometimes quite willing to listen and help because of those relationships. So, use the board for outreach. If not overused, your board members expect to be asked, to offer and to encourage use of their valuable contacts.