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The Value of your Board of Directors

Posted on September 9th, 2021


What is a Board of Directors?
The Board of Directors are a group of individuals within your company, elected or appointed as representatives of Stockholders / Owners to establish Corporate Governance and oversee Organizational Strategies, Capital Investments, Dividend / Profit share policies and financial accuracy, to name a few.
A Board of Directors (BOD) will help the senior leadership to step back from the daily operational grinds and focus strategically on its business. Board members (directors) that bring expertise from Strategy, Finance, Legal, Marketing, ICT and specialized industry / product related skills are almost always sought after.

There are basically two kinds of Boards:

  1. An Advisory Board is a less formal association of individuals. The Board members do not have any fiduciary or legal responsibility towards the owners, nor do they have any binding requirements for regular board meetings. The members have a genuine interest in the success of the company and its owner(s). An Advisory Board primarily advises and gives feedback but is almost never involved in the decision-making. Members mostly volunteer their time as mentors or in some instances may receive a small honorarium. This structure is best suited for early-stage Entrepreneurs and small sized startups.
  2. A fully mandated Board on the other hand has the ultimate power and holds fiduciary / legal responsibilities on behalf of your company. The board is fully accountable to its owners and shareholders. Fully mandated Boards conduct regular meetings and are heavily involved in the company’s decision-making processes. Board members for incorporated companies have a stringent compliance structure put in place by governing bodies from their respective countries. Fully mandated Boards are thus best suited for companies that want to bring in expert trusted advisors who will take decisions and be held responsible for the same. To accomplish this you should first exhaust your professional network. If that does not yield the level of expertise you are looking for you can call a company like CEO Search Partners, Strategic Food Partners, Inc. to assist you. Utilizing a specialize boutique retained search firm will make the job much easier, quicker, and usually with much better results.

CEO Search Partners your known partner in CEO and other C-Suite also specializes in the recruitment of proven trusted industry expert Board/Board Director candidates and we uniquely recruit candidates with your exact needed very specific industry experience and desired background. We recruit industry experts with experience in Food & Beverage, Consumer Packaged Goods (CPG), Direct to Consumer (D2C) and Subscription Based, Food Ingredient, Foodservice Manufacturer, Pet, Vitamin/Supplements, Personal Care, Retail and related industries. Additionally, we also have diversity board recruitment search practice to meet the needs of our current customers who are looking to expand this component of their boards.

How does a board of directors create value?
Lodestone Global recently published data that explores the financial benefit of implementing a board. 87% of survey participants responded their companies saw increased revenues and 81% reported increased EBITDA after implementing a board.

With a great board of directors, you can have people who are totally focused on what you need to be successful. They can guide you to avoid the risks you don’t really want to take. A great board of directors can help expand your vision in a way that helps you achieve your long-term goals and strategic objectives.

The board’s key power is to hire and fire the chief executive officer. Ensuring continuity of great leadership in the CEO role and in all mission-critical roles is how a board delivers its highest value.

But what value, beyond succession planning and the general monitoring and oversight of management, should a board contribute?

The answer to that question depends upon where the organization is in terms of size, growth and market penetration.

  • The board of a start-up or of a company with relatively flat revenues might need to actively engage in establishing or resetting strategic direction.
  • A company expanding into new markets or geographies may need its board to vet and advise on new opportunities.

A board’s particular focus at a given point-in-time, beyond ensuring fiduciary oversight, setting policy, and approving budgets should evolve in step with the evolution of the operating and competitive landscape in which the company functions.
So, to deliver a meaningful ROI each year, a board must ask itself the following 3 questions:

  1. Beyond standard management and fiduciary oversight, what does the organization need from us to maximize its success this year?
  2. By what methods and metrics will we gauge the value we contribute?
  3. What is the role of each director in advancing our board’s value proposition?

Asking and answering these questions will help your board enhance its contribution and shape how committees and the board operate to add value. The answers will also guide the process and content of the evaluation you conduct at the end of the year. And the management team, organization, and all stakeholders, in fact, will thank you for addressing these three questions.

What can a high-quality Board of Directors bring to the value proposition?

Skills & Expertise
Your business may not have all the skills & expertise needed to operate effectively and continuously in an ever-changing environment. A Board of Directors (BOD) will help the senior leadership to step back from the daily operational grinds and focus strategically on its business.

Board members (directors) that bring expertise from Strategy, Finance, Legal, Marketing, ICT and specialized industry / product related skills are almost always sought after. Other directors can bring along business contacts and networks, especially relevant for start-ups and high-growth companies. Boards also stand to gain when they have Gender, Demographic and Cultural Diversity.

Corporate Governance
A company’s Corporate Governance structure is critical for its successes. Think of Corporate Governance as a system of rules, principles, and processes by which your company is directed and controlled. They are guidelines as to how your company can fulfill its goals to enhance value.
Corporate Governance also provides a framework for balancing the expectations and interests of the many stakeholders in your company, which include your Shareholders, Board of Directors, Management, Employees, Customers, Suppliers, Financial Institutions, Government and the Community.

Independence & Accountability
Boards are independent, act only in the interest of your company, free from conflicting interests.
The Board of Directors has a dual mandate of Advisory and Oversight governed by their fiduciary / legal responsibilities. They are collectively or in rare cases even individually accountable for your company’s performance, compliance and risk mitigation strategies.

Strategic Direction
Strategy is as much a responsibility of the Board as it is of your senior management and leadership.
Boards take a lead role in devising Corporate Strategies, ensuring that the company and all its departments are aligned towards its Strategic goals at the same time monitoring proper implementation and execution of these Strategic Plans.

Credibility & Legitimacy
An effective Board portrays integrity and availability of balanced objective advice which helps mitigating risk. Financial Institutions, Investors and partners view it favorably, which effectively lowers the cost of capital financing for your company.

Customers, employees, and vendors view it as a safeguard of their interests. The ultimate protection of interests of various stakeholders of your company due to the existence of Boards further increases the Credibility of your company. This in turn can also be beneficial for owners / investors planning an exit strategy, make an Initial Public Offering (IPO), or further scale and grow the business.

A strong and effective Board of Directors is an invaluable asset, one that is a key to success in creating the wealth envisioned by the Entrepreneurs and Business Owners.

CEO Search Partners, Strategic Food Partners, Inc. recruit board directors for privately owned, founder led, public and private equity clients and are often tasked to recruit working board candidates who can drive transformation, facilitate aggressively growth, build strategy including M&A and platform roll up and or bring new channel, customer knowledge to the company.

We uniquely recruit proven industry experience winners and have the credibility, relationships, and unmatched access to this fresh talent due to our active industry participation. Our depth and specialization are unmatched by any search firm in the country belonging to over 34 related industry associations and attending over 22 conferences a year, hosting top to top CEO events and filling more than 900 hundred senior and executive level industry roles.

If you would like to speak to CEO Search Partners, Strategic Food Partners, Inc. about how we can provide you expert trusted advisors for your open Board of Directors position contact our CEO Robin Copping at (773) 294-6431 or www.ceosearchpartners.com