“It’s work… It’s not an invitation to some country club.” —David Litwiller, on board responsibility.
At last Wednesday’s Entrepreneurship 101 lecture, David Litwiller, executive-in-residence at Communitech, outlined the differences between boards of directors and boards of advisors. He also spoke about the responsibilities of boards of directors and what entrepreneurs should expect from their boards.
Differences between governance teams
One thing that David made clear is that the role of a director is no walk in the park. The three key things to know about directors are as follows.
Advisors, on the other hand, have less legal liability and responsibilities attached to their roles. Even if an advisor is very committed to his or her startup it’s important that he or she does not become so involved in the company that the lines between his or her role and the role of management become blurred.
Board of director responsibilities
Among other obligations, the board of directors is responsible for:
Board function and growth
There are a few characteristics that you can use to identify a good team of directors. Generally, good directors:
A board of directors needs to evolve in size and skills to match the evolution and growth of the company that it serves, as the needs and challenges of a company will become more sophisticated over time. Three years is the typical term limit for any board member, and directors should be networking to develop new candidates.
David recommends keeping a few high-impact board practices in mind.
This is just the tip of the iceberg when it comes to boards of directors, but as David said in his lecture: “Once you’re on the board, it’s all about what’s in the best interest of the company.”
For more advice on what to look for in a board of directors and for tips that can improve your board’s performance, check out the video from David’s lecture.
Produced by MaRS.
Next lecture: Financial Planning/Budgeting on Wednesday, March 19, 2014.
Please note that there will be no lecture on March 12 due to March Break.
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