The Ten Commandments of the SME Board of Directors

The work of a board of directors is hard work

What should board members bring along, what are their tasks, how do they themselves contribute to the success of the company? The ten commandments point out what a board member must pay attention to. Ten handy practical tips from Dr. Thomas Bähler*

1.  Bring enough time with you. The four to six board meetings and one general meeting per year are not sufficient. Board members must take enough time for their work and visit the company from time to time. If the company is not doing so well, the board’s activities will become extremely intensive and will include evening and weekend meetings.

2.  Don't try to please the management. There is no need for pats on the back. The task is to think, steer and question. The BoD is the institutionalized supervisory authority that is tasked with asking critical questions - before the market, customers or shareholders do.

3.  You are the "top personnel manager". The most important task is to "lead" the management - as a sparring partner, but also as a critic. In most cases, only the BoD can criticize and question the boss.

4.  Get the knowledge about the company and the business. What does the company do, who are the customers, who are the competitors, how do sales work, how does purchasing work? Every board member must know and understand the company, its business model and the market.

5.  Put finances first. Insist on meaningful reporting. Early indicators need to be identified: liquidity, profitability, investments.

6.  Prepare comprehensively for each meeting. Read the documents. They should be kept in a file that should always be at hand (with organisation chart, products, markets, group companies, names of key persons, etc.).

7.  Avoid unsolicited advice for day-to-day business. This is a tightrope walk: a good board member will want to give tips and advice. This mindset can quickly shift a board member into a collaborator. As soon as the day-to-day business is affected, the BoD must exercise restraint.

8.  Do not allow yourself to be instrumentalized against the management – whether by customers, suppliers, employees or lobbyists – there are often attempts to exert influence on management via the BoD. The BoD must make it clear: hints and wishes are accepted, without promises.

9.  Use your own network for the company. The BoD must stand by the company and also represent it externally, in its entire network as well as in associations and organisations.

10.  Question the BoD. It is the duty of an advisory board to be as open and critical of itself as it is of management.
Question: Are we doing our job well as a board, do we have the right competencies available?