Effective outside directors provide expertise and valuable relationships, enhancing AEC firm success with strategic guidance and forward-focused leadership.
Having outside directors for your privately-held AEC firm is one of the best ways to get the expertise and tap into relationships of people you could never employ on a full-time basis for a fraction of what they would cost you if they were full-time employees.
I have served on boards of directors (BODs) of firms with former chairpersons and CEOs of some of the largest and most successful companies in this business, as well as entrepreneurial firm founders, other entrepreneurs, former top regulators, high level people from client organizations of the company whose BOD I was on, and top people from seemingly unrelated industries who brought unique perspectives to the issues that the firm was facing.
When I think back on all of the boards of directors I have served on – whether that was as a voting BOD member or simply an advisor member – sometimes I was used effectively and other times I was not. Let’s take a look at some of the defining characteristics of the BEST of those experiences:
- We had a chance to participate in setting the agenda. The best scenarios always gave each of us BOD members a look at the draft agenda and solicited our opinions for additions to that. If we felt something was important it was usually added. It was never ignored or summarily dismissed.
- During the meetings, we stuck to the agenda and started and stopped on time as planned. Everyone on the BOD is busy and has travel schedules and other meetings to attend, so our time was respected. The chairperson keeps the meeting on track.
- We did not get sucked into discussions of stuff that was really part of day-to-day management. I have certainly experienced too much of that in many cases, as BODs of firms are usually dominated by insiders who are active managers of the firm. But again, if the chairperson is doing their job properly, these detours are minimized.
- We got the financials at least five days before the BOD meeting and then didn’t waste a lot of time on them at the meeting. Bad BOD meetings are where the majority of time is spent reviewing the details of the firm’s financials. Good meetings have a time to deal with questions but don’t drag everyone through a line-by-line review.
- I was in constant communication with the CEO and some or all of the other BOD members between the meetings. There was a lot of banter or chatter that kept us all engaged and helped form relationships. This kind of between-the-meeting dialogue is essential to getting the most from a firm’s outside directors as they feel more like a part of the business.
- I was listened to and not expected to rubber stamp decisions already made before the actual meeting. No one gets their way every time and I certainly understand that. But on the other hand if you are never listened to, why should you waste your valuable time there, either? On the few occasions I found myself in that position, I resigned or pulled myself out of contention for reelection.
- I was part of a group of people with wide-ranging backgrounds and experience who were open to hearing what others had to say. That openness and creativity is energizing and helps keep your outside directors learning and interested in your business.
- The meetings were focused more on future plans and actions versus what has happened in the past. Again – why have a BOD if all it does is look in the rearview mirror? The point is to help steer the firm in a positive direction for the future – not beat on management for past mistakes.
- We had someone there who was a great note-taker who accurately documented everything. Nothing is worse than spending four to eight hours in a meeting and making decisions with no notes documenting any of that. The note-keeper is typically one of the directors or someone else brought in just to take notes.
- Management did a good job communicating what happened at the BOD meeting to the rest of the owners and employees. This is a really important step because after these meetings everyone tends to be either curious or fearful of what happened at them. Communicating quickly and clearly to all employees and other owners is the way to address this common situation.
Using your outside directors to their fullest potential is just smart. How do you feel your firm stacks up on my 10 points above? If not so well, make changes!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.
