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Nutrients In Good Soil: Boards

Updated: May 28


When founders have built successful businesses, establishing a functioning board of directors is a next step toward ensuring that the company will, in their absence, continue to make a profit, bless the community, and advance its purpose.

Gil works his way up in the company hierarchy to become the President. He works under the founder. He runs the day-to-day business, always under the founder's scrutiny.

The founder is eighty. There is no succession plan.

Gil begins to push for succession planning, but the existing board of directors is "ornamental". An ornamental board consists of "yes" members, handpicked by the founder who function strictly for the founder's benefit. It often includes family members and other allies.

The founder agrees to add another member to the board, who is outside of the company and family. This outside board member is also someone that both the founder and Gil trust.

A functioning board (as opposed to an ornamental board) is empowered to:

  • Hire the CEO

  • Determine their compensation

  • Evaluate

    • CEO's performance

    • Capital expenditures

    • Dividends

    • Acquisitions & divestitures

    • Budgets

  • Spearhead and oversee succession planning that is shared with major stakeholders and updated annually.

Board members should have some experience that is valuable to the business. Optimally, they are still actively engaged in leading another company.

It is also important to understand what a functioning board does not exist to do:

  • Patronize the founder

  • Meddle in the daily affairs of the business

The new board member in the company Gil works for begins to ask piercing questions. A new spirit of accountability begins to infuse the business. Eventually, succession plans start to take place.

With great succession plans in place, the company continues to make a profit, bless the community, and advance its purpose. And Gil is happier.

Some less formal boards can help succession planning and build a stronger business for future generations; advisory boards and peer advisory boards. We will look at them next week.

Establishing a functioning board of directors is a next step toward ensuring that the companies will, in the absence of their founders, continue to make a profit, bless the community and advance their purposes.

Harry T. Jones


P.S. Here at Cultivating Impact, we are currently screening companies that generate between one and one hundred million in sales to partner with.

The top values we consider for partnership are:

  • Is your company profitable?

  • What are the top three values in your company?

  • How are these values demonstrated in your company culture?

Contact me at HarryT@cultivatingimpact.biz.

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