Laying the Legal Groundwork: How to Run an Effective Board Meeting
Last updated on July 14, 2022 by
How to Run an Effective Board Meeting
In the early days of a startup, board meetings can seem somewhat unimportant in the grand scheme of things, but they are incredibly important and can be extremely beneficial if run properly.
The primary purpose of a board meeting is to provide well-rounded corporate governance. The board drives the direction of the company, is in charge of a wide range of responsibilities in terms of guiding the company, and sets the strategic plans for your business.
In this article, we’ll review how to run effective and successful board meetings by matching expectations with reality, choosing the proper timing to meet, structuring your Board properly, and meeting for the right length of time.
Matching Expectations With Reality
During the early years of a startup, it is very common to have plans for marketing and sales, but it is equally common to have some portions of the plans not working as intended.
As many boards are helmed by experts and professionals, the meetings can make for an astoundingly efficient place to figure out what is working and what isn’t. A well-balanced board and thoughtful board meeting agenda can help you determine ways to address your company’s successes and failures.
Your board meeting should be used to identify your pain points, devise alternate solutions to any high-level problems you may be having, and establish key performance indicators (KPIs) to measure the success of your plans or implemented solutions.
Leverage the expertise and decision-making of your board members to help find new, unique, or time-tested solutions to problems you are facing and create action items.
Choosing Proper Timing
Choosing the proper meeting time can be important. Meeting too frequently might be just as disadvantageous as meeting too infrequently.
There are some things that a board must approve of to be completed. In the early days of a startup, these things are often done by providing unanimous written consent instead of having a physical meeting for simple “housekeeping” tasks.
For larger things such as financing or large changes in operation or outcomes, meetings are needed if unanimous written consent cannot be obtained. These types of events often require longer form discussions and simply applying the rubber stamp of unanimous consent can sometimes lead to issues in the future.
Meeting quarterly is a good starting point for a company in its beginning stages. Some companies will require more frequent meetings, but unless events are dictating a need to meet, quarterly is often acceptable.
Structuring Your Board
While your company is small, keeping your board small as well is advantageous. Having an odd number of board members can help prevent potential deadlocks in discussions and ensure board effectiveness.
When determining which investors get board seats it is important to look at the amount of ownership they have in the company. While the numbers can vary wildly depending on the company, in the early parts of a startup, 10 to 15 percent ownership might be enough to confer a board seat.
Later on, 10 to 20 percent could confer a board seat with 5 to 10 percent only offering an observer seat. That said, in larger companies with a wide and diverse number of shareholders, even a 5 to 10 percent interest can be enough to have control over the company.
How you structure your board will ultimately depend on your company’s ownership structure and how you wish to allocate the seats most effectively for your situation.
Length of Meetings
While companies that meet more frequently may have shorter meetings, keeping your meetings to a reasonable time frame is extremely important.
An hour and half is a good baseline timeframe for a quarterly board meeting with a normal agenda. Sending a board meeting agenda beforehand can help streamline the meeting as well. Taking less time if things are going swimmingly is fine, as is taking longer if there are multiple issues to iron out. You want to keep things precise, but allow for enough time to diver deeper into problem areas that need the extra attention.
Additionally, keeping board meeting minutes is a rather standard proceeding, and often required for anything official. With digital meetings becoming more common, some have considered recording the meetings instead. Recording the meetings is not advisable in most cases as there are many sensitive and confidential things being discussed.
Your meeting minutes should serve as a log of what agenda items and topics were covered and what outcomes were suggested. The minutiae of every discussion doesn’t need to be documented, though for certain subjects that may be preferable.
Carefully curating your board of directors and setting goals and expectations can help you run more effective meetings. As long as everyone is leveraging their expertise to provide solutions and efficiency is kept in mind, board meetings can be a boon instead of a time sink for your startup.
Take the time to carefully select your board members, what the board meeting agenda will be, how often you’ll meet, and how long each meeting will last. Further, you’ll want to perform proper board management, and ensure that there is clear separation between the board and your CEO’s ability to run the organization.