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Dealing with an Activist Board of Directors

Updated on January 12, 2012
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Ed has been an entrepreneur and business owner/start-up generator for 15 years. He has also been a shotgun coach!

Who is Really Calling the Shots

Being called to take on a highly visible role has both good points and bad points. You better be prepared from a personal protective mechanism even before you begin. Boards of Trustees or Directors may consist of several very different personalities and contributors, but one thing is usually present, the Chairman. The Chairman didn't get there because he/she wanted to be the Treasurer or Secretary. Look for his axe and figure out what keeps it grinding and you manage to get past the first step.

In three decades of calling on companies, often at the C-level and even occasionally at the BOD level, I have recognized some things to be aware of keep your wits about in order to make the best possible outcome. You must do some investigating before your first meeting in order to make a reasonable presence. Keep these key concepts at your finger tips:

  • Money If it is a public company, and you are calling on the Executive Director or some similar position that reports to the Board of Directors (BOD), go to the public records and search for the status of the company's profitability. Look to for the possibility of legal claims people are having to deal with - it is usually there and can be an influence on how someone is going to cooperate with you on a new project.
  • Communication is key for you to the manager. It is important for you to determine if the manager is able to communicate well with his BOD. Is he getting them to understand why their expectations aren't going to be met in the time frame they have prescribed. Is the BOD communicating their true interest in where they see the company going in the near - and longer term? Are the departments communicating relevant information up the chain and is relevant information being communicated back down the chain?
  • Vision If the vision has been laid out properly, everyone can "see" it and understand the steps in the process to attain it. New ideas are always needed to keep the activity level high and the process motivated. A good executive can share the vision of the company with the chairman of the BOD. When this comes together - the term well oiled machine can be invoked.
  • Expenses to achieve the goal are always under-estimated. Rarely can you build in enough padding that it can get past the BOD and you end up with enough to make the project a success on budget. Always be aware of how any approach may increase expenses that may cause some eyebrows to be raised.
  • Pressure from the board will keep your Director contact on his toes. When things are going well, the best BOD steps up the pressure - and so does the Director or General Manager. When things are the toughest, a good BOD will have done the analysis and they will take into account the whole situation. In those conditions the GM will work even harder to reach the goals.

Calling the shots at or near the top may come from other influences. I have been in fairly large corporations only to find out a patriarch owner is still calling the shots at the family picnic or dinner that I am never invited to. "Granddad doesn't like doing it that way," is a signal you aren't dealing with the one calling the shots.

One other point you can almost always recognize is when the executive that is running the organization acts responsibly but is always willing to speak his mind openly - he has a contract. I've seen fairly large organizations where communication had gotten pretty bad and they were on their 3rd Executive Director in as many years or less! The BOD could not find the right person for the job, it seemed. Finally there was a young man that stepped up and said he would be able to get everything the BOD wanted - if they listed to him and allowed him free reign to get things done, no favoritism. Oh, and "I also want a contract that provides me a severance of 5 times my annual salary plus a bonus of $1,000,000 if you fire me." What a plan. Not many folks will ever get that kind of deal, but the concept is there.

If you are that Executive Director, sometime it is in your best interest to find alliance with a majority of the board if you can't align with the chairman. It takes a majority, usually, to relieve the Executive Director of an organization. Sometimes working in this fashion you can organize an ouster of the chairman. More difficult, but more valuable to the organization for sure.

Best of luck to anyone who has to deal at the C-level or BOD level. The air is thinner there for a reason, but it can also be somewhat invigorating.

The Inventurist

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