Stop procrastinating on this issue and start searching in earnest for some outside directors to help you be more successful.
I have been a big advocate of having outside directors on the BOD of your privately-held AEC firm for many years. This is especially true if you find people who have been more successful than you have in business and those who can help you win new work.
While I have written about it before, here are some good reasons to have two or three outsiders on your board that I may not have covered:
- Mentoring for your CEO and other top managers. This may be the single most important benefit of having outside directors. Where else will you and your top managers go to get input from people with credibility? Sure, there are a bunch of executive coaches out there who are supposed to function as mentors, but how many of them have ever been in the top job before and really know what it’s like? The best outside directors make themselves available when needed to provide mentoring.
- Accountability for the CEO. Oftentimes in our business, the CEO is either one of the founders or someone who has been there the longest and/or has the largest ownership stake. They aren’t used to anyone asking them the tough questions that need to be asked, and in many cases, are truly unaccountable, especially if all the other BOD members are people who report to them in the functional organization. The outside BOD members can provide that honest input, however.
- “Been there, done that" experience to avoid costly mistakes. Many times, the outside BOD members – besides having very successful careers and entrepreneurial backgrounds – are older and have wisdom that can only be acquired through experiences that the insiders may not have. This applies to so many different areas of the business – from dealing with problem employees, to liability issues, to building ownership or negotiating leases, to company policy, to dealing with mergers and acquisitions – and much more. The outside directors’ experience can be invaluable.
- Connections to clients and potential clients. Sometimes these directors may come directly out of client or potential client organizations and have the insider knowledge of how to win work with them. In other cases, they may know people who work in those clients and can help. I have personally witnessed this as an outside director on boards myself more than once where the outside director helped the AEC firm win work they never would have gotten otherwise.
- Recruiting assistance. This is not commonly thought of as a benefit of outside directors but the fact is they probably know a lot of other good people who may be candidates for higher level jobs in the company. They can be tapped for those connections and help you find some good people.
- Connections to lenders, investors, and other financing sources. Once again, many experienced outside directors have been in the business world for a long time. They worked with banks, insurance companies, the SBA, and other sources of debt capital. Or maybe they had experience with private equity investors in the other companies they owned or worked with. And finally, maybe they themselves will want to invest in the company. This knowledge and these connections to capital sources can be invaluable.
I write this as someone who has been an outside director himself on more than a dozen company boards and who still is in some cases. And some of the other outside directors I have worked with have been immensely helpful – far, far more than they cost – to companies in our industry.
Isn’t it time you stopped procrastinating on this issue and start searching in earnest for some outside directors to help you be more successful? I think so!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.