As a company grows, its interface with markets, customer, partners and society at large also grows. The resources of the company’s owner and management are not then sufficient on their own to manage the company and the organisation while still responding to the changes happening around it. One way to rectify the situation and support management and owner is to form a skilled board of directors. The need for a board also increases during a transition phase – for instance, during a change of generation or when recruiting a CEO from outside the company.
The board is a reliable sparring partner for an SME
A board of directors is a good sparring partner for the owner and management, helping them to face the challenges of management. The challenge could be in selecting a strategic direction or in very mundane operational demands. The board of directors is an owner’s most reliable partner. The board must always put the company’s and owner’s best interests first while ensuring compliance with legislation and good practices.
Board of directors supports well-planned management
A clear framework for managing a company
Membership of a board of directors is a position of trust that must not be treated lightly.
In my experience, the board of directors creates a clear framework for managing the company. A board of directors convenes roughly once a month. A meeting that is already simply effective requires clear and timely reporting based on analysis of the company’s situation, and therefore a fit-for-purpose reporting system and appropriate expertise. And to act efficiently in the company’s best interests, it is not enough to look in the rear view mirror. The board wants management’s view of the months ahead. From this it follows that it is primarily, and solely, the company itself that benefits from any development work done to meet the board’s needs.
A partner in evaluating strategy, and the direction and options for growth
The board of directors is management’s and the owner’s primary partner in evaluating strategy, and the direction and options for growth. Should growth be sought through geographical expansion or by increasing the services in the value chain? Should growth be achieved through acquisitions, organically or by forming partnerships? As experienced business experts, board members are able to help in assessing risks and, if necessary, in avoiding them.
Experience in obtaining financing
Business operations, and especially growth, need effective financing. An oft-repeated phrase is that money is available for all good business ideas. Finding the right channels and methods, and convincing financers that the idea makes good sense, is another kettle of fish, though. A well-formed board of directors will possess adequate financing expertise so that the company’s needs, and solutions for meeting them, can be assessed and selected.
Support in locating resources
Once the direction is clear, resources are needed. Through its expertise and networks, the board can provide substantial support in locating resources for the company’s operations and growth, ranging from the recruitment of individuals through to creating networks.
Indispensable help in navigating market changes
The board of directors can give valuable assistance when encountering sudden market changes. As an example, my own experience grew when at the start of my career I experienced the economic depression that hit Finland in the early 1990s. As the manager of a large company, I faced a financial crisis as well as many smaller economic disruptions. That experience made it rather easier to assess the impacts of today’s coronavirus pandemic and envisage ways to mitigate them.
A solution for challenges in daily operations
The board can provide valuable insights for solving project-related challenges, bottlenecks in production or quality problems. Although the problems of a company’s daily operations may seem very unique and detailed from management’s viewpoint, in my experience very similar elements re-occur in them regardless of business sector. Today’s development topics are corporate responsibility and digital solutions & services. Since they are being addressed in almost all companies, many perspectives are available through skilled and experienced board members.
“…Board work and the challenges and opportunities of strategy implementation are Timo’s core competencies….”