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How founder CEOs can evolve their board and scale their business

Diverse perspectives, skill mixes and experiences are key.

In brief
  • Founder CEOs who are intentional about shaping their company’s board are better positioned for success.
  • Determining the right mix of skills and experience needed to drive the company’s ambitions is a crucial step in the board search process.
  • Diversity remains a central focus in board recruitment, not only from a social equity perspective but also because diverse teams perform better.

No matter where founders are on the entrepreneurial journey, the composition and role of their company’s board of directors are constantly evolving as the company’s lifecycle and funding stage progress. From startups in need of an advisory board’s guidance on business model changes to more established enterprises that seek to form a corporate board that can help scale operations, founder CEOs must take a strategic approach to the board search process to achieve successful board placements.

Board culture and structure

For founders who are looking to establish or enhance their board, there are several key considerations to building an effective board. First, they should be intentional about fostering the right board culture from the very beginning by seeking out candidates whose values and experience align well with the organization’s culture. Bringing in a variety of perspectives and skill sets (including an entrepreneurial mindset, particularly for new and emerging companies), enabling constructive dialogue around tough issues, and recruiting members with both an enterprise view and a cross-industry view will be essential. Experience and knowledge around scaling for growth are also crucial for board candidates.

Founders should also consider what type of board they truly need. For many, the traditional board of directors structure will be too large and complicated to address startup governance, strategy and other issues. Thus, leveraging a smaller advisory board to bring in external perspectives or adding one independent board director might be the most practical approach for early-stage companies. Those who plan to pursue an IPO in the future will also need to contemplate the board’s committee structure, audited financials, protocols around independent directors and much more. Also, as new and emerging companies grow, founder CEOs should focus on evolving the board to serve as a strategic asset. For example, while members of their personal network or company funders may have initially served as directors early in the company’s lifecycle, founder CEOs often later need to pivot by bringing in directors who can help scale the company, mitigate risk and perform other key strategic functions.

The effective search process

Navigating the board candidate search process strategically is also crucial. “I don’t think it’s ever too early to start thinking about who could be helpful to your company in an advisory or board capacity,” says Lily Chang, retired senior advisor, Leonard Green & Partners who also serves on multiple boards. Fortunately, there are several tools and resources available to support these efforts. For example, conducting a board matrix exercise can help companies map out the core competencies needed and experience desired while also avoiding skill redundancies across board seats.


Some organizations also find it helpful to establish a board search committee. In that scenario, it’s important to bring a disciplined approach from the outset by determining a regular meeting cadence and defining decision-making protocols and authority. These bodies should also be mindful of creating a positive experience for candidates through consistent and transparent communications, which benefits not only board candidates but also the reputation of the company.


“You really want to keep it small and selective and move through the process in a disciplined manner,” says Alexis Hennessy, a partner at Heidrick & Struggles who specializes in board recruiting within the tech industry. The group also agreed that regardless of which methods a company leverages in seeking out new board members, its CEO is almost always heavily involved.


DEI and other considerations

The conversation around board diversity has grown complicated. On one hand, regulators and investors have increasingly outlined expectations around gender and racial diversity for boards, often positioning this topic as a crucial pillar of environmental, social and governance (ESG) matters. At the same time, a rising chorus of detractors have argued that these measures are bad for business, citing the Supreme Court’s 2023 decision to end race-conscious college admissions. The reality on the ground, however, is far more nuanced.


“Most publicly traded companies we’re seeing are taking matters into their own hands and holding themselves accountable for 40% of diversity on boards,” Hennessy says from an anecdotal perspective. And according to Jack Flug, a managing director with Marsh who leads its Financial and Professional Liability practice, the shift in diversity-conscious board recruitment activities we’re seeing now is likely only temporary.


Founders and other company stakeholders who continue to prioritize diversity, equity and inclusiveness (DEI) need to think differently and be creative in sourcing board candidates. For example, reaching out to accounting firms, investment banks, affinity groups and law firms in their sphere can be a great way to find diverse candidates, says Cecyl Hobbs, an executive director with Russell Reynolds Associates who advises organizations on an array of board matters. They also need to hold their search firms accountable by validating the diversity of these firms’ leadership and networks.


Hobbs adds that the importance of board diversity extends far beyond the regulatory realm: “When you’re thinking about winning the talent war, people looking to join a company are going to look at the board composition. They’re going to look to see the C-suite composition.” However, Hobbs notes that companies will need to be more strategic about building diverse boards: “One has to question, what is the business value? What is the rationale for bringing diversity to the board, and how do we then translate that into the kind of board members we’re looking for?”


“Indeed, the EY Center for Board Matters team works with our clients (as appropriate) to focus on diverse skill sets first, which often reveals the need for more diverse board candidates,” says Dan Clifford, EY Americas Center for Board Matters Board Network Leader.


Board service today also involves an even larger risk management effort, with individual board members now potentially liable in derivative actions and shareholder class action matters. For this reason, companies will also need to obtain directors and officers liability insurance to enable directors to focus on their duties. “It allows the board to do its job,” Flug says.


Assembling the right board with a diverse mix of skills and experience can make all the difference in a company’s success. Founder CEOs who take a hands-on approach to identifying, vetting, creating positive experiences for and onboarding highly talented board candidates with an eye toward scaling the business to drive growth will be rewarded with valuable stewardship as their company matures.

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