Why Every Company Needs An Independent Board Member, and Where to Find Them
It can be lonely at the top, especially for new CEOs building and growing a business. This is why I have always been a strong proponent of appointing experienced independent members to the boards I advise and companies I invest in. Outside leaders bring unparalleled industry background and operational expertise that not only helps create a more effective, dynamic board, but also strengthens the company as a whole from the inside out.
In fact, after 20 years of working with growth companies, I get most excited about investment opportunities when I have the perfect person in mind to add as an independent member of the board. I may pass on an investment if we don’t know the right person — that’s how essential this position is to a company’s future growth and success.
Why Independent Directors Are So Valuable
1. Industry Expertise
I believe you can have diminishing returns from adding too many investors or too many of the same type of leader to a board. When structuring a board, the goal should be to provide maximum benefit to the company, the CEO and board governance.
I often seek to add one or two executives to the board who have never worked at the company. For example, Hayley Barna, co-founder of Birchbox recently joined the board of at-home hair color company, Madison Reed, as an independent member. She is providing valuable expertise on subscription business models and the beauty industry. This is a critical area of knowledge and experience that Madison Reed can lean on as they grow their prestige brand.
2. CEO Experience
No one can communicate with a CEO quite like another CEO. For one-on-one coaching and insider perspective, people with CEO experience make excellent appointments. They can advise entrepreneurs on growing and leading teams, dig into business topics at a detailed level, and identify early indicators of problems, which can be invaluable to a company’s future.
Just a year ago, I invited Catherine Monson, CEO of FastSigns, to join the board of a growing early education company, The Learning Experience, as an independent member. She is a great sounding board for the CEO of The Learning Experience on operational and organizational change and growth. And, her position on the board of the International Franchise Association, additionally provides the company with a broad view on the franchise industry and trends.
3. Meet Changing Needs
As a company grows, a board will often reach a point when they need someone new with a specific skill set to get them to the next level. We were able to fill a strategic planning need by appointing Tom Nolan, former senior vice president of Ralph Lauren Golf, to the Kendra Scott Design board. He is sharing his operational and lifestyle brand expansion best practices to help fulfill the Kendra Scott vision of growing a lifestyle brand. Keep in mind, your strongest board member doesn’t always have to be a former CEO, Presidents and General Managers of divisions of large corporate companies with P&L experience are often running large businesses within larger corporations.
Other well-known brands are appointing board members for specific business needs. Luxury fashion company Coach elected digital expert Stephanie Tilenius, CEO and Founder of Vida Health, to their company board. Coach cited Tilenius’ experience in the consumer internet sector as particularly valuable to them.
Where to Find Independent Board Members
1. Network. Because having the right independent board member in mind can impact an investment opportunity, networking is a proactive part of my day and it should be for any entrepreneur and founder, too. I use my own network and tap my partners’ networks to find board talent. I regularly attend conferences and events to stay current with industry trends and to meet new visionaries. I met Susan Metzger, another outstanding independent board member for women’s apparel brand Bailey44, at an industry lunch.
2. Cold-calling can also work. PCA Skin has two excellent independent board members thanks to cold-calling, including the prior COO of Obagi Skin Care. We identified his experience as ideal, it turned out he lives nearby, he accepted a lunch invitation, and we were able to convince him to join the PCA Skin board.
3. New Online Resources such as theBoardlist – a curated talent marketplace for the technology community – can help you discover highly qualified female leaders. theBoardlist makes a strong business case for more female participation starting early in the lifecycle of companies. I will also ask entrepreneurs who their ideal advisor is and sometimes through the magic of six degrees of separation we can find a way to an introduction. LinkedIn is also a great tool to find mutual connections and request introductions to dream candidates.
Today there is no excuse for not adding diversity and outside experience to boards of all sizes and companies in various stages. Leverage your network, use resources like theBoardlist, and don’t be afraid to ask executives you admire to join your board or to provide introductions, because they might surprise you.
Adding independent board members isn’t a new practice, and is just good board governance. Sometimes it can be forgotten, but it’s a critical tool for maximizing the potential of my investments.