How many people, when to recruit and what kind of strategy? It depends. That’s the only answer that applies across all health science emerging companies considering formation of a board. Board directors serve a variety of roles: they provide strategic decision-making; set operational and performance metrics for the company; provide access to capital; and provide valuable connections. We surveyed a few trusted board members for advice on when to build a board, how to select board members and what size board to consider.
When to Build a Board. Deciding when to build a board depends on the stage and goals of the company. Are you raising capital? Seeking strategic contacts? Venture capital investors will likely get seats and a well-selected strategic advisor may also be a candidate. Of note, smaller companies do not always have the option to hand select members or self-determine timing. Many times directors are selected based on financing – they’re selected because they have an equity position, noted John B. Henneman, EVP & CFO, NewLink Genetics, board member for various medical technology companies.
How to Select Board Members. If you’re a first-time CEO, you might not have the experience. Board members should help build the company, not tell you what you’ve done wrong, commented Chris Adams, Founder, CEO and director, Cydan. Therefore, it is important to have board members that complement the executive management team. For example, if the CEO has a strong scientific background, it can be constructive to bring on operational expertise.
Number of Board Members. Seven is an optimal number of board members because any more is too many and you want an odd number. Boards often have three or four members from venture capital firms which leaves one or two seats for independent directors, according to Steve Hoffman, board member for various biotech companies and Sr. Advisor, PDL BioPharma. Understanding this limit up front is important when strategizing potential candidates.
Where to find Board Members. Personal contacts are important in the early stages, but you need to go beyond your network as the company matures, said Robert DeLuccia, former Chairman, Dipexium Pharmaceuticals. Whether it is an in-house recruiter or an external one, they play a vital role in seeking the best candidates with their network of talented and intelligent individuals.
And don’t forget about diversity – a board with a diverse background can be very beneficial in extending the company’s reach.
In sum, corporate governance is an important consideration for all companies, large and small. Ensuring a responsible board that can help guide corporate direction is important for all parties – management, employees, customers, suppliers, partners and others. Make sure you make the most of yours.
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