Board Meeting Etiquette Part 1 (The Purpose)

Board MeetingThe effectiveness of Board meetings has a significant impact on the ultimate performance of an organization. And they require a certain etiquette in order to be most effective. But how exactly should they be treated? Why should we have them? What should be discussed? Who should attend? Answering such questions can be difficult for first-time entrepreneurs who find Board meetings to be a foreign experience. Even veteran entrepreneurs should be reminded of proper Board meeting etiquette. So I’ve asked some experienced entrepreneurs and investors to offer their opinions about Board meeting etiquette in the context of small, private businesses. Their responses will be compiled into a series of seven separate blog entries.

What is the purpose of a Board meeting? Why should we have them?

“To inform the Board members about the status of the company. To discuss strategy and budget objectives. To illicit feedback from the members. To motivate the Board to support the company initiatives both during the Board meeting and beyond. To approve measures that impact the shareholders. To review management’s performance and allow the Board to determine if management needs to be rewarded or replaced. We should have them because management needs support. A Board is intended to help create that support and be a structure not only for “approval” but to be a “sounding board”. Also management needs a focused opportunity to discuss pros and cons of the business…good things happening and challenges. A Board meeting should be healthy dialogue analyzing managements recommendations. Approval should also be sought for initiatives that effect the shareholders directly or indirectly.” –Jaime Villagomez

“The purpose is to ensure fiduciary responsibility to shareholders and to help forward strategic decisions.” — Allan Young

“A board of directors at a small company is often made up of the principal investors and the Company’s CEO. Additional people may be asked to attend board meetings, such as the CFO, COO, VP of Sales, etc. depending upon specific topics.  Board meetings are an important part of a company’s operations — they are used to keep the company’s investors informed, to solicit feedback and to provide corporate governance outside of the typical company day-to-day operations.” –Gregg Rosann

“It’s best to begin with the purpose of a board of directors. The board is a governing body of the corporation which deals with major strategic issues. Their first task is to hire a CEO and approve a senior management team. They also have fiduciary responsibility for proper capitalization of the company and in providing an adequate return and protection for the shareholders. What is important is that their role is NOT as day-to-day operational managers. Frankly, this is an area where many boards overstep their bounds. They try to second-guess the management they hired by injecting themselves in daily decision-making. It is important for the CEO to have the management authority to run the business (and provide the necessary return for the shareholders). The CEO should have the courage and personality to stand up to board members who overstep their mandate in this area.” –Robert Rieger

“Board meetings provide invaluable perspective to a private, public and non-profit entity through the expertise and may times external perspective of its membership. They allow primary shareholders, corporate officers and investors voting control and oversight of most significant business operational, sales and marketing strategies. In addition, they monitor and measure leadership and management effectiveness. They often provide a check and balance against business strategy and tactics relative to moving priorities and time lines. They may allow an organization to tap into networks and solutions available through its membership where otherwise those opportunities may be difficult or costly to source or acquire.” –Tricia McGarry

“The purpose must closely align to meet the board members needs. Early in my business I wasted a lot of time giving reports to the board members that they either didn’t understand, or didn’t care about. For example, most investors are not interested in your day-to-day woes and all of the business information. Rather, they essentially ask two questions: 1) what is my ROI (current and projected) and 2) can we close the meeting? So the purpose of Board meetings should be to address the needs of those present.” –Scott Spurgiez

“The Board is the governing body of your organization. The purpose of a Board meeting is to provide the Board with the appropriate information needed to make the most educated decisions about implementing corporate government.” –Jacob Webb

Next question (Jan 19):

How long should a Board meeting be?

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