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Do I Really Need a Board of Directors?

My column this month raises a question I received from a CEO. This is meant for those CEOs who are either running a non-profit or a privately held organization. All publicly held or publicly traded organizations are required by SEC law to have a board of directors.

 

Just feed them and get them on their way as fast as possible.

 

One of my early CEO jobs was with a publicly-traded company. I had very little experience dealing with boards, other than the occasional board presentation. I remember asking a fellow CEO, “What am I suppose to do in my first board meeting?” The response was, “Just feed them and get them on their way home as quick as possible.”

To this fellow CEO, a Board of Directors was a pain to deal with and offered no value. What I soon discovered was that he couldn’t have been more wrong. In every company I have ever run, forming a board of directors has always been one of my first steps. I once bought a small software company and upon closing on the deal called five former board members to ask if they would serve on my board. One of those calls was greeted with a pause, followed by, “Paul you own the company, you know you don’t need to have a board.”

If you are a CEO or executive director of an organization and don’t have a board of directors, you are hurting your chances for success and are doing a disservice to your organization.

 

Can’t the board fire me?

 

Whenever I consult with a CEO that doesn’t have a board, I ask that person why. At first, CEOs will tell me they don’t have time, don’t know who to have on the board, or worse, they don’t need one.

After probing a bit, the real reason comes down to control and fear. There’s the fear that bringing a board on will result in the board taking over, or worse, firing the CEO. These folks have been watching too many movies. In my opinion, if you are worried you will get fired or someone will take over, you need to take a closer look at your own performance and change what you are doing. If it is your company, the board can’t fire you, nor can it take over. A board can, however, be brutally honest with you and give you the feedback and advice you need to hear. Why wouldn’t you take advantage of such a gift?

 

It is very different for a non-profit organization.

 

Non-profit organizations are a very different and complex animal. Unlike a for-profit with broad ownership or publicly traded organization where the board’s role is to look out for the interests of the shareholders and hire and fire the CEO, non-profit boards have operational responsibility.

There is actually an 80 percent overlap in duties and responsibilities between the CEO/executive director of a non-profit organization and the board of directors. This is always a shock to most board members that usually get selected to join a non-profit board because they have an ability to “give or get money.” The non-profit board is responsible for everything from the mission to the programs to the management of the resources.

This is both a curse and a blessing. CEOs by their nature enjoy independence and don’t like anyone telling them what to do. As a non-profit CEO/executive director, the board MUST become your partner. Failing to establish or build a strong partnership between the non-profit board of directors and the CEO/executive director results in a really bad outcome for only one party, and it isn’t the organization or the board!

 

Learn to embrace or partner, or move on.

 

If you are running a for-profit organization, embrace your board (even the board members you don’t like or respect). They can really help you and your company. Failing to do so will result in you needing to update your resume. Those of you who read my column know that I have learned this lesson firsthand.

If you are running a non-profit organization, learn to accept that you must partner with your board (and not just with the members you like or like you). Board members of non-profits share the passion that you have and choose to be a part of the organization because of a desire to do good. My experience has been that the biggest “pains in the rear end” tend to be the best board members. They are direct, brutally honest and want the organization to succeed.

 

So, start embracing and partnering if you are a CEO or executive director. Good luck! FBN

 

By T Paul Thomas

 

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