Growth Strategies

10 Tips for Forming a Board of Directors

min read
Opinions expressed by Entrepreneur contributors are their own.

10 Tips for Forming a Board of DirectorsEntrepreneurs who want to take their business to the next level may eventually come to the conclusion that they need a board of directors. But what does it take to form an effective one?

Julie Garland McLellan, a leading governance consultant and the author of the new book Dilemmas, Dilemmas II, is happy to show entrepreneurs how to do just that. The boardroom authority has lots of experience, having spent a lifetime resolving conflict in the boardroom and examining different modes of raising capital.

Here are Garland McLellan's top 10 tips for recruiting and retaining a board:

1. Use a crystal ball: Think long term and recruit directors who can govern the company you aspire to grow into rather than the small business you might be now.

2. Find a go-to guy or gal: Have at least one director who understands boards and governance (preferably one who is trained or chartered by the National Association of Corporate Directors). Don’t rely solely on the lawyers and accountants to have governance skills.

Related: Growing Your Business in Management

3. Create job descriptions: Establish a clear job definition for directors (executive and non-executive) and define the role the board will play in strategy, risk management, etc.

4. No playing favorites: Insist that all directors recognize their duty to the company as a whole (or all of the shareholders) rather than play a limited role of safeguarding the interests of one shareholder — even if it’s your biggest investor.

5. Include a variety of flavors: Build a team that possesses a range of skills and diverse backgrounds in order to get different perspectives on each strategic discussion. [revised]

6. ‘Yes Men’ (or Women) need not apply: Select directors who would quit the board if they disagreed with a course of action you were taking. 

Related: How to Grow Your Business in Risky Times

7. Lean toward like-mindedness: Seek consensus on all decisions, not majority voting, and be sure that all directors know how to assess issues from the perspective of the stakeholders and what is right for the company.

8. Draw that imaginary line: Be clear about the differing roles of the chairman and CEO — and don’t try to combine them in one person.

9. Remuneration requires research: Pay a fair and responsible equivalent, and seek expert advice if you need it. 

10. Boardroom hierarchy: Remember that the CEO reports to the board; be ready for a challenge and embrace the collective wisdom and enhanced discipline.

What advice do yo have for for creating a board of directors? Add to this list in the comments below. 

Related: How to Take Your Business to the Next Level

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.