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How to Structure a Productive Board of Directors

Although many business entities, such as a partnership or limited liability company, do not need a board of directors, all corporations and non-profits are required by law to create a board of directors. Beyond this basic requirement, the law does not stipulate organizational structure or responsibilities for a board of directors. Each company decides these matters internally.

A board of directors can be a group of experienced professionals who will work closely with company officers and management; or, the board can be a collection of celebrities or community leaders who will take part in fundraising and company marketing, but will have no hand in day-to-day business decisions. As well, the board can be run as a model of Robert's Rules decorum, or it can meet and record minutes in a casual fashion that simply satisfies basic requirements of the law.

What type of board you form will turn on how your company will be organized, what board candidates you can recruit, and the experience of your officers and management. Members are generally paid for service on corporation boards, and serve for free if the board of directors represents a non-profit company.

Here are tips for structuring your board:

Even if not required by state law, specify rules of operation for the board in your corporate bylaws - meeting structure, recording of minutes, number of board members, term length of directors, board officer positions, how officers are nominated and voted, length of term for an officer, etc.

A productive board pursues issues and projects that are in line with company goals.

Before the formation of the board, clearly define the board's primary mission and its relationship to company officers and management. If the board, for example, is expected to dedicate itself to fundraising, that mission should be clearly spelled out in the bylaws for the board.

Don't expect your board to consist of only selfless individuals who put the team first.

Anticipate that the board may have friction, and that, eventually, you may have members who do not want to be part of the team, but want to dictate to it. Defining a committee-formation procedure, and committee debate guidelines will protect your board of directors from being hijacked by overbearing members.

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Information here does not constitute a legal advice. Please contact an attorney or accountant for specific expertise.

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