Alex Denne

Growth @ Genie AI | Introduction to Contracts @ UCL Faculty of Laws | Serial Founder

Building Your Board of Directors

9 Jun 2023

32 min

Legal

Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

When it comes to setting up a business, having an effective board of directors is paramount. Governance, accountability, strategy and oversight are all pivotal aspects which need to be considered when forming a board that can drive success. To help entrepreneurs in this endeavour, the Genie AI team provides free board templates and step-by-step guidance to ensure boards are correctly assembled.

Good governance is fundamental for any company; boards of directors shape the policies and procedures that must be adhered to by any organisation - especially publicly traded companies where compliance with additional laws and regulations is essential. Similarly, creating accountability through a board of directors means shareholders have someone accountable should they have any issues or complaints about the company or its performance; this reinforces trust with shareholders. When it comes to strategy and goal setting, boards of directors are responsible for enabling businesses to meet their objectives by providing strategic vision. Additionally, robust oversight from a board ensures the safety of both employees and customers alike - particularly pertinent in heavily regulated industries such as healthcare or finance.

In essence, having an effective board of directors is key for success in business - one which needs careful consideration when assembling members who can deliver on these four aspects mentioned above. The Genie AI community template library provides free templates which anyone can use as well as detailed guidance on how best to establish a proficient board structure - all without requiring an account with us! So if you’re looking for assistance in building your own successful Board of Directors, read on below for our tutorial advice on how you can gain access to our template library today!

Definitions

Board of Directors: A group of people elected by shareholders to provide guidance and oversight for a company.

Shareholders: People who own a portion of a company’s stock.

Strategic Direction: A plan of action that outlines the long-term goals and objectives of a company.

Fiduciary Duty: A legal obligation to act in the best interest of another person or organization.

Liability: Legal responsibility or obligation.

Ad-hoc Committees: Temporary committees that are formed to address a specific issue or task.

Protocols: Rules or procedures that must be followed.

Succession Plan: A plan that outlines the steps to be taken when an individual leaves a role or position.

Exit Strategy: A plan to transition out of a role or position.

Understand the value of having a board of directors
Decide on the size and structure of the board
Identify the skills, experience, and expertise desired in a board member
Develop a recruitment and selection process
#1. Draft a job description
#1. Choose an appropriate recruitment method
#1. Develop an interview process
#1. Develop a shortlist of candidates
Identify potential board candidates
#1. Network and research
#1. Contact potential candidates
Make a formal offer and define expectations
Onboard and orient new board members
#1. Create a board manual
#1. Schedule an orientation session
Develop a board evaluation process
Establish board committees
#1. Determine desired committee structure
#1. Draft a committee charter
Foster effective board meetings
#1. Establish an agenda
#1. Establish meeting protocols
#1. Utilize technology
Monitor board performance
#1. Measure progress against goals
#1. Assess board member performance
Manage board transitions
#1. Develop a succession plan
#1. Develop an exit strategy
#1. Ensure a smooth transition

Get started

Understand the value of having a board of directors

Understand the purpose of a board of directors and how they fit into the overall governance of an organization
Research the roles and responsibilities of board members, such as oversight and strategic advice
Consider the qualities and skill sets that are necessary for the board members to have in order to be effective
Evaluate the benefits and drawbacks of having a board of directors so that you can make an informed decision

You will know you can check this off your list when you have a clear understanding of what a board of directors is, their purpose and roles, and the benefits and drawbacks of having a board.

Decide on the size and structure of the board

Determine the ideal size of the board – this will depend on the size of your organization, the types of decisions that need to be made by the board, and the amount of time you have to dedicate to this process.
Consider whether you will have an executive or non-executive board. Executive boards typically have close ties to the organization and can provide operational guidance. Non-executive boards are often more independent and provide strategic guidance.
Decide whether you will have a board chair – this is usually the person responsible for leading the board meetings and managing the overall structure of the board.
Determine the length of each board member’s term – this is usually determined by the organization’s bylaws.

You can check this off your list when you have determined the size, structure, and length of terms for the board.

Identify the skills, experience, and expertise desired in a board member

Identify the skills, experience and expertise that the board of directors requires to carry out its duties
Research potential board members who are likely to have the desired skills, experience and expertise
Create a list of criteria, such as industry knowledge, experience in board governance, financial expertise, etc., that potential board members must meet
Identify and assess any potential gaps in the current board’s composition

How you’ll know when you can check this off your list and move on to the next step:

When you have compiled a list of criteria and identified potential board members who fit those criteria, you can move on to the next step.

Develop a recruitment and selection process

Brainstorm the qualities and qualifications you want in a board member to create a list of criteria
Create a timeline for recruitment and selection
Decide who will be responsible for selecting the board members
Establish a selection committee
Establish the criteria for selecting board members
Create a recruitment plan
Consider the diversity of the committee when selecting members
Develop a process for interviewing and selecting board members
Create a list of questions to ask prospective board members
Create a selection scorecard
When you have completed the recruitment plan and selection process, you can move on to the next step of drafting a job description.

Draft a job description

Outline the skill set and qualifications you are looking for in the board of directors
Create a job description that reflects the qualifications and expectations of the position
Make sure to include a clear description of the role’s responsibilities and duties
Consider crafting a job posting that will attract the ideal candidate
Use job posting platforms and other recruitment methods to spread the job posting
Once you have a job description drafted, you can move on to the next step of choosing an appropriate recruitment method.

Choose an appropriate recruitment method

Consider the characteristics of the board members that you need to recruit
Choose a recruitment method that will help you find the right people, such as word of mouth, industry contacts, or an online job board
Make sure your recruitment method is free of bias and allows you to compare candidates fairly
Once you have chosen an appropriate recruitment method, you’ll be able to move on to the next step of developing an interview process.

Develop an interview process

Create a list of questions to ask potential board members that will help you determine if they would be a good fit
Research best practices for conducting interviews and have a plan for the process
Assign each board member an area or topics to focus on during the interview
Schedule the interviews and confirm the time with each candidate
Assign a member of your team to take notes and record the interviews
When the interviews are complete, review the notes and determine who would be the best fit for the board of directors
Check off this step when you have reviewed the notes and chosen the board members.

Develop a shortlist of candidates

Create a list of criteria or qualifications that you are looking for in a board member
Use the criteria and interview process you developed in the previous step to identify potential candidates
Make contact with potential candidates and assess their suitability for the role
Develop a shortlist of candidates who meet the criteria and are willing to take on the role
Make sure the diversity of your board is taken into account when creating your shortlist
You will know you can check this off your list when you have a shortlist of suitable candidates who meet the criteria and are willing to take on the role.

Identify potential board candidates

Identify the skills and experience that you need from a board member.
Identify people in your network who may have the desired skills and experience.
Reach out to your contacts and ask for referrals.
Search for potential candidates online.
Use online resources to identify potential candidates who are experts in the field and have the desired skills and experience.

You can check off this step once you have identified a list of potential board candidates.

Network and research

Identify the networks and organizations that have potential board members that match the criteria you’ve identified in step 2
Reach out to contacts in these networks and organizations to ask for referrals
Look for potential board members online through websites such as LinkedIn and other professional networking sites
Research each potential board member to ensure they meet the criteria you identified in step 2
When you feel you have a good list of potential board members, you can move on to the next step of contacting potential candidates.

Contact potential candidates

Identify and reach out to potential candidates for your Board of Directors.
Ask for their resumes and a list of qualifications.
Schedule a meeting or phone call to discuss their interest in the role and the responsibilities of the Board of Directors.
Ask potential candidates what skills and abilities they can bring to the board.
Follow-up with candidates to answer any questions they have.
When you have enough qualified candidates willing to serve on your Board of Directors, you can check this off your list and move on to making a formal offer and defining expectations.

Make a formal offer and define expectations

Draft a formal offer letter outlining the expectations, duties, and benefits of the role
Specify the length of the term, any compensation that may be offered, and other expectations
Reach out to the prospective board member to explain the offer and answer any questions they may have
Have the board member sign a board member agreement outlining their duties and expectations
Once the agreement is signed, you can check this step off your list and move on to onboarding and orienting new board members

Onboard and orient new board members

Welcome new board members and give them a warm introduction to the organization
Introduce new board members to existing board members
Explain the board’s role, responsibilities and expectations
Provide a board orientation to ensure new board members know the organization’s mission and values
Provide new board members with a copy of the organization’s bylaws, policies and procedures
Ensure new board members have access to any information they need to be successful in their role
Make sure new board members understand the organization’s strategic plan and how they can contribute
Make sure new board members understand how the board decisions are made and their role within the board
Make sure new board members understand the board’s role in fundraising and how to engage with staff and other board members on the organization’s fundraising efforts

You’ll know you’ve completed this step when all new board members have been welcomed, welcomed to existing board members, and provided with the necessary orientation materials.

Create a board manual

Create a written document that outlines the roles and responsibilities of each board member
Include information about the board’s mission, objectives, and the issues the board will be discussing
Make sure the board manual is up-to-date and includes any relevant laws and regulations
Include information about the board’s financial responsibilities and the board’s fiduciary duties
Make sure the board manual is available to all board members in both hard copy and electronic formats
Provide a copy of the board manual to new board members at their orientation session
When the board manual is complete, provide a copy to all board members and post it on the organization’s website
Once the board manual is complete and distributed, check this item off your list and move on to the next step.

Schedule an orientation session

Choose a date for the orientation session
Send out invitations to confirmed board members
Prepare an agenda for the orientation session
Make sure to discuss the board of directors roles and responsibilities
Include information about the organization’s mission and vision
Make sure to answer any questions the board members may have
When the orientation session is completed, you can move on to developing a board evaluation process.

Develop a board evaluation process

Develop and agree on criteria for evaluating board performance
Create a board evaluation form that reflects the criteria
Assign deadlines for completing the evaluation
Determine who will administer the board evaluation process
Discuss the results of the evaluation and make changes to the board as needed
Establish a timeline for conducting future evaluations

Once you have developed and agreed on criteria for evaluating board performance, created a board evaluation form reflecting the criteria, assigned deadlines for completing the evaluation, determined who will administer the process, discussed the results of the evaluation and made changes to the board as needed, and established a timeline for conducting future evaluations, you can check this off your list and move on to the next step.

Establish board committees

Create a list of board committees that are necessary to support the mission and goals of your organization.
Identify committee responsibilities and select committee chairs.
Choose committee members based on their knowledge, expertise, and interest in the subject.
Establish committee goals and objectives.
Establish a timeline for committee activities and reporting.

Once you have established board committees, you can move on to the next step of determining the desired committee structure.

Determine desired committee structure

Analyze your organization’s needs to determine the most effective committee structure
Consider the size of the board, the number of committees and the responsibilities of each committee
Develop a committee structure that ensures balanced representation and coverage of relevant topics
Allocate board members to each committee in a way that promotes collaboration and diversity of views
You can check this step off your list when you have finalized the desired committee structure.

Draft a committee charter

Research and review model committee charters from other organizations
Draft and define the purpose, scope of authority, and expectations of the committee
Establish the committee’s meeting schedule, agenda, goals, and decision-making processes
Assign committee roles and responsibilities
Define voting procedures for the committee
Outline the roles of the board chair and the committee chair
Create a list of potential members for the committee
You can check this off your list once the committee charter has been drafted, reviewed, and approved by the board.

Foster effective board meetings

Set a meeting schedule and commit to it.
Set a clear agenda for each meeting and distribute it to members ahead of time.
Make sure each meeting has an appointed leader and timekeeper.
Keep meetings focused on the agenda and timed to a specific duration.
Have a dedicated spot to record and distribute meeting minutes.
Take active steps to ensure board members are engaged, involved and heard.
Follow up on any actions that were assigned in the previous meeting.

You can check this off your list and move on to the next step when you have a regular meeting schedule and agenda in place, and when you have taken steps to ensure board members are engaged, involved and heard.

Establish an agenda

Brainstorm a list of topics that need to be addressed at each meeting
Identify topics that need to be discussed at each meeting
Establish an agenda for the board meetings that outlines topics to be discussed and how much time should be allocated for each topic
Distribute the agenda to board members at least 48 hours prior to the meeting
When you have successfully established an agenda for the board meetings and distributed it to board members, you can move on to the next step.

Establish meeting protocols

Create a set of rules and expectations for participants to follow during each meeting, such as how to address each other, how to respectfully disagree, and how to ensure that everyone is heard.
Set a clear agenda and timeline for each meeting, and make sure all participants are aware of it.
Make sure all participants understand their role in the meeting and the expectations for their participation.
Establish a system for taking notes and documenting decisions and tasks.
When you have established meeting protocols, you can move on to the next step: Utilizing technology.

Utilize technology

Research and evaluate technology solutions that can help your board function more effectively
Consider cloud-based software solutions that track board members’ contact information and meeting minutes
Utilize video conferencing to hold remote meetings
Consider a secure online portal for board documents
When you have identified the technology solutions that work best for your board, implement them and provide training as needed
You will know you are done with this step when you have chosen the technology solutions that are best for your board, have implemented them, and have provided training for board members.

Monitor board performance

Set up performance metrics that the board should strive to meet
Establish regular reporting to track the board’s performance
Review the board’s performance regularly, and provide feedback as needed
Make any necessary changes to the board’s operations, structure, or membership as needed
When performance metrics have been met, and the board is performing as expected, you can move on to the next step.

Measure progress against goals

Review progress the board has made against its goals
Identify areas where progress has been made and areas where more progress is needed
Discuss progress of various initiatives within the board
Identify where board members have contributed and where they need to improve
Develop new goals or adjust existing ones to take into account changes
Analyze the impact of the board’s actions and decisions on the organization
Establish a plan for making necessary changes to ensure goals are met
When the board is satisfied with the progress made against its goals, check this off the list and move on to the next step.

Assess board member performance

• Assess board members’ performance by evaluating their individual and collective contributions to the organization.
• Ask board members to assess their own performance in order to identify areas of strength and areas for improvement.
• Compare performance to goals set at the beginning of the term.
• Discuss individual and collective performance in meetings and during private one-on-one conversations.
• Make any necessary changes to the board’s composition and structure.
• When all board members have been assessed and any necessary changes have been made, you can check this off your list and move on to the next step.

Manage board transitions

Create a plan for board transitions: identify and recruit new members, define the timeline for onboarding and integration, and develop a plan for departing members
Identify the criteria for selecting new board members: consider the mix of skills and experience needed for the board to be effective
Establish a timeline for onboarding new members and integrating them into the board: set goals, review expectations, and provide an orientation to the board’s work
Develop a plan for departing board members: recognize their contributions, identify the transfer of their knowledge and experience to other board members, and thank them
How you’ll know when you can check this off your list: when new members have been recruited and integrated into the board, and when departing members have been thanked and their knowledge transferred to other board members.

Develop a succession plan

Establish criteria for selecting new board members
Create an onboarding process for new members
Develop a list of potential future board members
Create a system for tracking and evaluating current board members
Create a timeline for when board members will transition off the board
When you have a clear plan for board transition and a list of potential board members, you can check this off your list and move on to developing an exit strategy.

Develop an exit strategy

Brainstorm different scenarios in which the board of directors might need to step down, such as if they are no longer able to fulfill their duties, or if their terms are up.
Identify a timeline to determine when the board should step down, as well as a plan for when the board should be replaced.
Develop a plan for how the board of directors will be replaced when the time comes, including identifying potential candidates and establishing criteria for selection.
Create a document outlining the exit plan for the board of directors, including the timeline and selection criteria, and make sure all board members are familiar with the plan.
When the exit plan for the board of directors is in place and all board members are up to date on the plan, it’s time to move on to the next step.

Ensure a smooth transition

Create a timeline for the transition of leadership, including key tasks and deadlines
Set a timeline for the search for new members of the Board of Directors
Identify the skills and experience necessary for the new members of the Board of Directors
Develop a succession plan for the Board of Directors
Have a Board of Directors meeting to discuss the incoming Board members
Hold a formal introduction of the new Board members
Ensure Board member orientation and onboarding is carried out
Confirm that all members of the Board of Directors have received their Board package
Monitor and review the Board’s performance regularly
When all of the above tasks have been completed, you can move on to the next step.

FAQ

Example dispute

Possible lawsuits referencing board:

A plaintiff may raise a lawsuit against a board if they have been wrongfully dismissed from their position, or been retaliated against for exercising their rights.
They may also raise a lawsuit if they have suffered discrimination or suffered a breach of contract, such as not being paid the agreed-upon wages.
A plaintiff may also raise a lawsuit if they have been subjected to health and safety violations or have been exposed to a hostile work environment.
A plaintiff may also raise a lawsuit if they have been denied benefits or have been denied access to resources or opportunities that were promised in their contract.
A plaintiff may also raise a lawsuit if they believe that the board has acted in an unlawful manner or has breached their fiduciary duties to the company.
A plaintiff may also raise a lawsuit if they believe that the board has failed to act in the best interests of the company, or has made decisions that are not in the best interests of the shareholders.
A plaintiff may also raise a lawsuit if they believe that the board has not acted in accordance with the company’s corporate governance policies.
A plaintiff may also raise a lawsuit if they believe that the board has not provided adequate oversight or has not taken steps to ensure the company’s financial stability.
A plaintiff may also raise a lawsuit if they believe that the board has engaged in fraud, mismanagement, or other illegal activity.

If a plaintiff is able to prove that the board has acted illegally or has breached their fiduciary duties, then they may be able to win their case and receive compensation for any damages they have suffered. A plaintiff may also be able to receive reimbursement of any legal fees they have incurred in bringing the lawsuit.

Templates available (free to use)

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Introduction

Definitions

Contents

Get started

Understand the value of having a board of directors

Decide on the size and structure of the board

Identify the skills, experience, and expertise desired in a board member

Develop a recruitment and selection process

Draft a job description

Choose an appropriate recruitment method

Develop an interview process

Develop a shortlist of candidates

Identify potential board candidates

Network and research

Contact potential candidates

Make a formal offer and define expectations

Onboard and orient new board members

Create a board manual

Schedule an orientation session

Develop a board evaluation process

Establish board committees

Determine desired committee structure

Draft a committee charter

Foster effective board meetings

Establish an agenda

Establish meeting protocols

Utilize technology

Monitor board performance

Measure progress against goals

Assess board member performance

Manage board transitions

Develop a succession plan

Develop an exit strategy

Ensure a smooth transition

FAQ

Example dispute

Possible lawsuits referencing board:

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