How to maintain an effective board of directors

It takes many people to make a company run. Owners, management and employees all make companies successful. Another important group in any company is the board of directors.

Boards have many responsibilities, including providing continuity for the organization, selecting and appointing a chief executive, governing the organization with policies and objectives, and acquiring sufficient resources for the company to operate. Effective boards can help your company to run properly and be successful.

“An effective board brings an outside perspective for the owners and management who are typically caught up in the day-to-day operations and running the company,” says Jim Bechtel, CPA, director, assurance and business advisory services with GBQ Partners LLC. “Board members can bring in their best practices and experiences from their own companies or involvement on other boards.

Smart Business spoke with Bechtel about how to make sure your board of directors is effective and the qualities of a good board member.

What makes a board effective?

The board needs to provide an outside perspective on the company’s issues and challenges and supplement the talents of the owners and management.

As an owner, you need to remember to listen to your board. A lot of times the owners and management are very entrepreneurial and like to make their own decisions. You need to step back and listen to what the board tells you. Sometimes you need to look at what’s best for the company, not necessarily what you think might be best based on your personal experiences and/or biases. The board can provide this type of information.

What are some qualities of a strong board member?

They need to be prepared. They need to be willing to state their opinions and challenge the company when necessary. In other words, they shouldn’t be the type of board that just agrees with and rubber stamps everything — there should be some back and forth between the board, the owners and management, and they should not be afraid to challenge company decisions.

Board members should have diverse backgrounds, and the expertise and experience to supplement gaps and weaknesses of the owners and management. They need to be able to use their experience on other boards, along with their familiarity of current best practices in various areas of business.