5 Steps to Develop an Effective Board of Directors

Is your board hurting or helping your business?

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Companies with strong, well-functioning boards are more likely to thrive and succeed through leadership changes and industry challenges.

“A board of directors can make or break a company,” says James Jirak, Pinion biofuel advisor. “An effective board of directors is the compass guiding a company through the ever-changing seas of business, ensuring it stays on course, navigates challenges, and reaches its destination of success. That doesn’t happen by chance.”

Annual or regular check-ups are recommended to ensure strong leadership is at the helm of any business.

Here are five steps to develop an effective board:

  1. Build trust.

Trust is the foundation for a healthy and effective board. Without trust among board members, it’s hard to make sound decisions and serve the best interests of the organization and its stakeholders. When there is trust within the board, members are more likely to identify potential risks and address them proactively. In contrast, a lack of trust can lead to blind spots and missed opportunities.

Ask yourself:    

Do I trust our management?

Do I trust our fellow board members?


  1. Strengthen communication.

If there is lack of trust on a board, you will see it play out with stifled communication. Board members may hold their tongue in a meeting or share selectively out of mistrust for certain members, leading to a vicious cycle. Be intentional about fostering open and transparent communication between the board and management.

Ask yourself:

Do members of the board speak openly as a group?

Do I feel free to voice my own opinions?


  1. Create structure.

An effective board meeting requires structure. Have a clear and directed agenda, clear the action items that will be voted on, strive to keep meetings under two hours, send out board packets at least a week ahead of the meeting. Encourage board members to read the packets ahead of the meeting.

Ask yourself:

Do meetings routinely stretch on for hours?

Do we routinely get off track and down rabbit holes?


  1. Create a succession plan.

On average, a healthy board sees member turnover every 7-12 years. Change is expected, but not always planned for. However, a succession plan ensures a smooth transition of leadership when current members complete their terms or step down. It also allows time for knowledge transfer, preserving the company’s culture and heritage. If needed, reach out to an objective third-party that can help establish a written succession plan.

Ask yourself:

Do we have a well-documented succession plan in place?

Do we have a diverse set of skillsets and experience on the team?


  1. Develop an associate board member program.

An associate board member program is one of the best ways to develop future board members, expose patrons of the business to inner workings of the operation, and increase transparency. This provides the added advantage of preparing potential members well in advance, ensuring they can hit the ground running when they join the board.

Ask yourself:

Are we developing current members for leadership roles?

Would this type of program support our succession plans?  

 “With the many uncertainties of business, don’t let the health of your board be one of them,” advises Jirak. “Invest time and effort into your board as you would each of your services and offerings. The value of a strong leadership team is impossible to overemphasis.”

Connect with a Pinion advisor for guidance around developing an effective board of directors, establishing a succession plan or building leadership. 

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