An Effective Board Begins With an Effective Process

By Steven E. Sacks, CPA, CGMA, ABC

In my last post, Selecting Your CPA Firm’s Board: Go Beyond the Eeny Meeny Miny Moe, the issue was that you want to have the proper composition with the right values, philosophies and a shared commitment to the success of the organization.

A matter you think needs immediate attention could simply be a symptom of a larger problem. You would not visit your doctor to treat your broken leg with a band-aid, so why look for a fast, ineffective and incorrect solution as a way to fix an operational or cultural problem. This is why those who are on the board are selected for their acumen and belief in the why the firm exists and how it can be improved.

If you want to ensure the firm’s long-term success, here are a few suggestions:

• Create a board member operating manual that describes the duties, actions and responsibilities, and includes a formal section for a signature that confirms compliance. You can ask outside counsel for advice on such wording along with actions that can justifiably terminate the individual’s place on the board for cause. Some firms require regular attendance at board meetings, participation on at least one subcommittee, and of course, completing an assignment required for a subsequent board meeting. Otherwise, lack of attendance, progress and contribution renders the board useless.
• The board, while it may meet monthly or quarterly, should be thinking strategically year round. This is especially true when there will be rotations giving rise to nominations. So rather than create a nomination subcommittee of the board or a separate entity, consider a name change to something like Board Creation Council; it would go beyond prospecting, contacting, orienting, supporting, training, mentoring and evaluating board members.
• Assess the current board by looking at its size, diversity and creativity. Consider what is necessary, such as specialized knowledge, skills, prior experience sitting on boards (outside of the firm), business development skills, and other important attributes.
• In addition to an evaluation of the board composition, take a hard and deliberate look at what the board has too much of and too little of. This ties into the prior bullet point because you may be overlooking important elements that will help your firm become more competitive, as well as create initiatives that result in a better work environment.
• Can we safely assume that all firms have a strategic plan? Let’s not. If such a plan does not exist, this would be a good time to create and connect a plan with the right board composition. The new board, using a fresh set of eyes and a new voice will help draft the vision, mission, values and goals, as well as the short-, mid- and long-term strategies. At the same time, skills and expertise are identified and tracked — looking at the firm’s future stars is a start. Once the criteria is developed and consensus reached, the current and future board members will have the necessary information to facilitate the board operations in concert with the strategic plan.

 

Remember, you are building a foundation for the firm and not looking to stock the board with “favorites” that may result in a future crisis of confidence.

 

About Steve

Steven Sacks is the CEO of Solutions to Results, LLC, a consultancy that specializes in helping individuals, firms and organizations meet the challenges of communicating with clarity and purpose. Visit his website at www.solutions2results.com.