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Corporate Compliance Insights
Home Governance

A Board Built for 21st Century Competitive Advantage

by Tracy Houston
November 18, 2016
in Governance
The board’s role in creating a competitive edge

While turbulence is not new, its nature and degree present an ever-increasing need for executive-level strategic acumen to capitalize on opportunities and mitigate risks in the ever-more-sophisticated business environment. Strategic talent search for board members matches the company’s future challenges with a candidate’s skills, experience and expertise. Recruited in this manner, directors can clearly help take the company to the next level. Cultivation of this focus occurs at the intersection of business and talent at all levels of the company and is no different for the boardroom. Alignment of strategy, talent and the director role is critical to the oversight role of strategy in a high-performing board.

Below are the top five tips to help you build a board with a focus on competitive advantage:

1. Build a future-focused board

The framework to build a board that will help create competitive advantage is all about integrated thinking, foresight and decision-making rationale. A forward-thinking framework looks at the next five to 10 years and defines skills, experiences and overall professional backgrounds for director candidates that will help build competitive advantage for the company.

2. Recruit directors for strategic challenges

Creating a 21st century board means making significant transitions toward more future-focused leadership behaviors and practices. Rethinking both how new directors are recruited and successfully retained can provide a progressive focus. Candidates whose backgrounds speak to strategic challenges will ultimately bring a honed perspective for competitive edge. Here are a few areas to consider when thinking about your board candidates:

  • Growth: Does the candidate have a track record in growth situations?
  • Innovation: Does the candidate have experience with innovative cultures?
  • Ambidexterity: Does the candidate have foresight into new markets while appreciating legacy positions?

3. Mine the collective intelligence of your board

In today’s world, executives are establishing processes that have an emphasis on collective wisdom for competitive advantage. This concept can be created and executed for the boardroom with the following:

  • Define the board structure and size and provide written specifications for each director position, board and committee charters and dedicated dates a full year in advance for quarterly board meetings.
  • Prepare for board meetings. Set board meeting management (pre-meeting, meeting, post-meeting) goals. Strategic facilitation in a board meeting should allow for a balance of time for both presentations and discussions.
  • Conduct a board evaluation that produces high-level thinking in a structured, organized manner. This big-picture thinking combined with an action plan moves the needle on board performance and helps to lay a foundation for continuous improvement.

4. Create CEO and board alignment

Board alignment with the CEO is a critical component of a high-performing board. Here are a few highlights to help plan for CEO and board relations:

  • The most important job of the CEO is to gain the trust of the board – spending time with each director inside and outside the boardroom to get a complete understanding of their thoughts on the company strategy and issues of concern.
  • As the CEO, be mindful that all the board is on the same page and work toward a collegial environment. Ask for constructive challenges to key strategic assumptions and other items of importance to the company.
  • Create clear and consistent communication with the board that ensures no surprises in the boardroom.

5. Provide real compensation

Public and private company director compensation varies widely depending on the size of the company and the demand for the executive’s expertise. Compensation can be cash, equity or a combination of both. The cash fee can be a monthly or annual retainer, or variable, perhaps per meeting. While smaller public company compensation averages around $100,000, cash compensation in private companies can be as high as $50,000 a year. Reimbursement for any expenses associated with the director role and directors and officers liability (D&O) insurance are also common practice.

Ultimately, to build a high-performing board depends on the vision of all parties involved. A progressive board composition is evidence of where the owners/managers/sitting directors are taking the company. The trade-off to gain the “best” directors is time and money.


Tags: Technology
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Tracy Houston

Tracy Houston

Tracey HoustonTracy E. Houston, M.A. is the President of Board Resources Services, LLC. She is a refined specialist in board consulting and executive coaching with a heartfelt passion for rethinking performance, teams and the boardroom. She provides a highly successful executive coaching engagement to help candidates gain a public company board seat.

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