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What makes a good board for a growing company?
At a glance
- After reaching certain milestones or goals in your business journey, you may need to readjust your strategy to reach the next level, which might mean bringing new skills and capabilities into the business.
- Assessing your board members’ performance against their potential can help you identify who is delivering for you, who needs development and who is not fulfilling your requirements.
- Make sure that your board members’ job descriptions reflect your new strategic objectives and they’re incentivised to make them a reality via their bonus or rewards scheme.
Firms preparing for a sale or targeting the next growth stage often need new leadership skills and experience to achieve their evolving goals.
Companies frequently hit ceilings as they pass revenue milestones, which requires leaders to reassess the skills needed to reach the next level. This might mean upskilling or restructuring a management team. Here, we’ll look in more detail about the new skills your board may need to help your company scale up, the tools and techniques you can use to reskill, and the increasing importance of diversity and inclusion.
Aligning your board with new business goals
You can tell a ceiling is approaching when your business becomes less efficient and produces less income or profit for the same effort and resources. That means it could be time to reassess your goals and strategic priorities; review existing board members’ skills against new plans; and see where you need to reskill, hire or replace.
Andrew Shepperd, Director and Co-founder of Entrepreneurs Hub, says: “You need different skills to start a business versus scaling it. The business’s needs will change and some early leaders may not be comfortable with the scale or have the expertise to handle it. If they don’t adapt and grow, the business can outgrow them, and previously valuable team members can get left behind or out of their depth. I have heard business owners say, ‘It’s beyond my experience’, or ‘I need to be part of a bigger, stronger business family to reach the next level’.”
What skills are needed to grow your business to the next level?
As your business grows, you’ll likely have to acquire many wide-ranging new skills. For example, you may need:
• a more experienced sales leader to achieve higher numbers, build a sales team or use their experience of international sales to attract overseas customers
• a finance director to ensure the fiscal rigour necessary to optimise and protect a larger business
• a leader with experience of mergers and acquisitions, to grow your business this way
• a production director to introduce efficiency-building disciplines in your growing production or manufacturing capabilities
• specialist distribution experience – such as a director of distribution – to cope with greater demand for your products.
How to assess your current talent
Conduct a thorough strategic review of your business, including a financial analysis and a feedback process across all staff and leaders. Use this to find out what you as a firm already do well, require to improve or need to do more or less of.
Andrew recommends using a nine-box-grid analysis for your board. This is a talent-management tool that allows you to assess your team’s performance against their potential and identify gaps and weaknesses. Plotting individuals on the grid reveals where they are on a scale from ‘bad hire’ (bottom left) to ‘star’ (top right). Anything in between reveals what they may need to improve and in which areas. Review these skills gaps in relation to your strategic goals.
“Often, a developing organisation will outgrow even its initial best performers,” says Andrew. “They weren’t bad hires. But the firm is moving to a different level and the grid forces you to act where necessary, rather than kick the can down the road. And it often shows how many more people towards the top right of the grid you need to develop.”
Set individual and corporate goals for board members so they understand the firm’s new strategic priorities and where they need to reskill. Regularly review and feed back on their performance, document the meetings and record progress.
As part of this process, you could also conduct psychometric tests for each board member and allow open dialogue about the results, with feedback from other team members.
If you’re struggling with these exercises, consider hiring an external board development adviser.
Incentivise senior leaders against strategic objectives
As part of this reassessment, linking strategic goals to daily tactical behaviour is critical. Ensure your job descriptions and incentive schemes for your senior leaders, especially bonuses and commissions, reward the right performance to support the business goals. These could be profit margins, order-turnaround speeds, and conversion rates for the products, services or geographical areas you want to target or improve.
You may also need to set goals around lower staff churn; employee engagement; health and safety performance; and environmental, social and governance (ESG) factors, including equality, diversity and inclusion (EDI).
Andrew says: “It’s vital for your board to identify and communicate these goals clearly to employees, and show the reasons and benefits of achieving them. The board also needs to live those goals and be role models, which means all the behaviours and communications should relate to and reinforce those strategic goals. Without this, there will be confusion, inefficiency and waste, and goals will be missed.”
Diversity among your board;
You may also want to consider the diversity of your board and whether it reflects a range of different voices, experiences, backgrounds and skills. This includes factors such as gender or minority ethnic representation.
Research shows that increased diversity can lead to better decision making, risk management and innovation. It can also support your reputation as a fair and inclusive workplace. People who can feel safe and be themselves at work are generally happier and more productive.
“This is an emerging area, but I find most SME owners realise the more sensitive they are to diversity, the more it helps attract the talent they need,” says Andrew.
This approach can also help you access specific skills – for example, international, cultural, legal and practical know-how for doing business with certain customer types and markets.
Get started by:
• setting commitments around increasing representation, for example of gender and minority ethinic groups
• reviewing policies and processes to make sure they support the needs of all employees
• educating your board on the benefits of diversity, and how this can be unlocked through an inclusive culture
• offering diversity training for leaders
• encouraging open conversations about diversity issues in the workplace and allowing employees to feed back on how to evolve the company’s approach.
How we can help
If you’re looking at new hires or other expansion opportunities and want to review your finances to help make these work, contact us today.
We work in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, who have been carefully selected by St. James’s Place. The services provided by these specialists are separate and distinct to the services carried out by St. James’s Place and include advice on how to grow your business and prepare your business for exit and sale.
Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
SJP Approved 15/06/2023
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