Whether it's succession planning to help you prepare for exit, to step away, to scale up, or to secure investments, members agree that the right support system around you can help you achieve your ambitions quicker.
When you are ready to step back, you have reached the fun part. You can leave the grueling day to day decisions to your senior management team and step up into a more strategic position. But how do you build a leadership team you can trust, and a board to take your business to the next level?
- Promoting Internally: Have you defined the role and who in your team has the passion and ability to step up into it?
- Effective Management: Do you have a manageable number of direct reports, and are you preparing and chairing for more productive management meetings?
- Building & Optimizing Your Board: Do you have a clear idea of why you need a board, the different roles and what should you expect from them, and how to find the right people to fill them?
When looking for an MD or CEO, the instinctive first choice for members is to promote from within, because they have familiarity and an understanding of your business that can only come with time. Some members have found that if they keep too flat a structure then ind ividuals will naturally start jockeying for a promotion. Other members have found bringing senior leaders in from the outside hit and miss but all agree that it' s as important to have the right val ues and chemistry at this Level as skills.
Go into the process with the mindset that anyone in your business could have t he passion and ability to step up, and it might not be the obvious choice based on hierarchy. Try to identify potential and gaps in skills and experience that can be coached -either by you or someone on your board.
Here are some tips and tactics from members of The Supper Club that have gone through the process:
Take time to reflect: If you are stepping back for the first time, establish in your own m ind what you are truly passionate about and what you are great at doing. Remember, it' s your business and you are entitled to play whichever role you like
- Tip: If you enjoy selling, focus on strategic sales or partnerships; but some members warn against including your sales in the company revenue target so they are considered 'value added'
The crisis test: Ask yourself who you think could manage a crisis best, and design a test based on a scenario that has o r could happen. If it's your number two, ask how they would deal with this crisis if you were gone and how they would manage the business
Define the role: Are you looking for someone to manage the business as MD so you can focus on your growth strategy or a CEO that will impress investors and potential acquirers? Define the role around a related skill set and behaviours you want to see, not just tasks and competences
- Tip: Look beyond job title to what your business needs and t he type of person who can deliver; don't be afraid to elevate someone who meets your need
You can improve the efficiency of your managers and your management meetings if you set clear expectations around preparation and outcome. You can also get more out of meet ings by chairing effectively and understanding that everyone has different decision-m aking preferences -with some rushing towards completion and others needing time to reflect.
Here are some tips from members:
Reports: No one should have more than 7 direct reports; you will be spread too thin to give enough time to your managers and to the projects you need to work on
- Tip: An annual or six-monthly 'Strategy Refresher Meeting' will allow you to review the success of your plan t o either pivot o r start again, with a recap at six o r three months to check progress
Meetings: A monthly management meeting shouldn't be more than 2 hours and weekly 1-2-1 meetings with managers shouldn't be more than an hour. If you are struggling to chair effectively, bring in your NED, get coaching, or bring in a guest chair
- Tip: Submit all reports and questions in advance of your management meeting and make sure everyone reads in advance to focus on 'doing' rather than 'discussing'
Use Day Zero, Day One & Day Two to maintain drive to scale: At Day Zero you are building a team, have lots of data, and are experimenting to find your market; at Day One you have the right team, the right product or service, and you're scaling; at Day Two, the business is scaling without input from the founders. This is the time to return to Day Zero to begin the cycle with a new area of growth
- Tip: One member successfully driving scale only gives energy to decisions or activity that will help him to achieve a 1Ox growth objective that everyone has bought in to
Building and optimising your board
Founders build a board to improve governance, to help secure growth investment, to scale and to prepare their business for sale. Before deciding who to recruit on your board, it's important to understand different roles and what they will contribute to your business:
- An executive director is a member of the board who also has management responsibilities A non-executive director (NED) is a board member who generally advises on corporate governance, financial management and growth strategy
- An executive chairman is a common role for founders Looking to step back and bring in an MD/CEO as part of a succession plan
- A non-executive chairman doesn't manage the business but does manage the board and the relationship between investors, NEDs, and the executive board
With any of these board positions, aim to bring someone in who can genuinely add value to the business, rather than simply police you on matters such as compliance.
Here are some recommendations from members:
Recutiment: If your investors want you to recruit a senior team, make sure you have in put into the selection process and find a balance between cor porate and entrepreneurial thinking
- Tip: Resist pressure from your investors to make very senior hires too quickly and use their resources to find someone with experience of helping an entrepreneurial business to scale
If you promoted internally: you may need an adviser or coach to help them focus on being board members instead of treating board meetings as extended management meetings
Keep entrepreneurs on the board: Always have someone on board with an entrepreneurial mindset, and ideally someone who combines the drive to grow with an understanding of governance and financial management
Managing differences: It's fine to have different perspectives and preferences on the board as long as everyone has a shared vision; keep checking that motivations are aligned, particularly when preparing for exit
- Tip: If there is a dispute and communication breaks down, bring in an experienced professional chair to help resolve it as early as possible to prevent it becoming toxic; if you can't resolve it, then make the tough call
You are most likely to see value at 12-months and have a clearer idea of who is contributing most, so hold off on making changes unless there is a clear issue.
Check back for part two of this feature looking at getting an NED and Adivory Board.
If you're interesting in connecting with our members by joining the Club, apply to be a member here.