Imagine running a firm with 68 owners. Imagine trying to agree on a strategic direction. That’s a constant challenge for me — and one which hit a critical juncture a couple years ago.
At that time, my firm decided to survey the 68 U.S. and Canadian companies that own us to prioritize several potential strategic directions. To my disappointment, expanding our international capabilities came in 10th of the 12 options. My instincts told me international expansion was more important than that.
So with the support of another director, I persuaded our board to ignore the survey results and aggressively expand our international distribution.
Doing so significantly strengthened our competitive position and a majority of owners has benefited. Without the support of my board, however, this opportunity would have been missed.
As CEOs of private companies, we struggle over strategic issues. We often feel the need for individuals with relevant experience to test our decisions and provide counsel. That’s a role outside advisers and directors can play.
They can take a fresh look at our plans and performance. They bring us back to reality — supporting our intuition or steering us from a bad decision. They can also lend credibility to our organization.
It has become difficult, however, to find qualified people to sit on a board of directors due to increased litigation. Advisers, on the other hand, do not have the fiduciary duty of directors. Advisers, like directors, can be seasoned business executives. They will listen and critique your ideas, explore strategic options and help shape your vision. There are a few key decisions only a board of directors can make, but for many firms, advisers provide a deep reservoir of outside expertise.
Why would someone want to serve on your board of advisers? It’s not for the money; many private companies pay as little as a few thousand dollars a year to an experienced director or adviser. Look at this opportunity from their perspective. A member of your board of advisers can pick up new ideas, as well as new contacts, that might benefit his or her own organization. Being an outside adviser also offers the chance to see problems from different perspectives.
When looking for directors or advisers, make sure they have:
1. Knowledge and successful experience in functional areas in which you need help. If your background is in sales, for example, look for people experienced in finance, engineering or production.
2. The ability to ask the right questions — ones that test your assumptions or shed light in areas in which you are uncertain.
3. A willingness to make time for you. Learning about your company and attending meetings can be time consuming. If you do not have quick access by phone or e-mail, they are not good candidates.
4. A track record or name recognition that would be helpful with clients, suppliers or sources of capital.
5. A value system that complements the values of your management team.
What about asking your attorney or accountant to serve on your board? The disadvantages far outweigh the advantages. They seldom have operating experience in business and they already serve in advisory capacities. Don’t complicate these relationships with a seat on your board.
Having outsiders as directors or advisers shows you are serious about growing your business with controls and accountability. There are always issues the CEO cannot discuss inside the company. Not only do I rely on my board of directors to help me with such issues, but I’ve been a member of a professionally facilitated group of CEOs called The Executive Committee (TEC) for six years.
These outsiders have helped me become a better CEO. Tom Harvey ([email protected]) is president and CEO of Columbus-based Assurex International, a global organization of commercial insurance brokers. He reports to and serves on a board of 14 directors. He also serves on the boards of three other firms where he interacts with 22 other directors.
