Entrepreneurs View Corporate Boards as a Hindrance Rather Than a Help

Many owners of smaller companies are limiting the growth and development of their enterprises by failing to assemble an effective board of competent directors.

(PRWEB) October 6, 2006 -- Many ambitious entrepreneurs are missing a key factor in the development of their businesses by failing to ensure their companies are led by an effective board of competent directors according to Colin Coulson-Thomas, Professor of Direction and Leadership at the University of Lincoln. Speaking this week at the International Conference on Corporate Governance and Board Leadership the Professor argues “The right board can make a huge contribution to the growth of an enterprise.”

Coulson-Thomas, author of ‘Shaping Things to Come’ and the forthcoming book ‘Winning Companies; Winning People’ has recently advised over 60 entrepreneurs on how best to build their businesses. He reports “Hardly any of the smaller companies have a working board in the sense of a group that meets regularly, works through a formal agenda, addresses strategic as opposed to operational issues, takes minutes of its proceedings and follows up its decisions. Only a handful of the smaller companies employ non-executive directors, most of whom are owners and/or relatives.”

Coulson-Thomas finds: “The more thrusting entrepreneurs tend to view directors – particularly non-executive directors – as passengers who might get in the way, or worse try to prevent them doing what they think is ‘right’ for ‘growing the company’. On the whole board meetings are not regarded as opportunities for strategic thinking – directors are discussing operational matters rather than shaping things to come.”

In the main, Coulson-Thomas reveals: “Founder entrepreneurs like to take the ‘key decisions’ themselves, and there appears to be some instinctive reluctance to ‘being constrained’ by a board. Many of the founders seem to fear a loss of control to ‘outside directors’. There is also a widespread perception that a functioning board is ‘for larger companies’ and an unnecessary ‘overhead cost’ for a smaller enterprise.”

The Professor reports: “The more entrepreneurial spirits encountered tend to do their ‘original thinking’ in the evenings and at weekends. Those with a small circle of close friends sometimes attach more weight to their views than to the opinions of fellow directors. Quite a few of the founding entrepreneurs commented ruefully that they were ‘on their own’ and lacked anyone who could act as a sounding board and with whom they could discuss sensitive issues.”

Coulson-Thomas believes: “While many of those encountered take steps to obtain independent advice on an ad hoc basis, most lack the continuity, objectivity and input that an appropriate and properly constituted board can provide.” He found: “Few of those met on visits to smaller companies have spent time thinking through the distinction between direction and management. On the whole a ‘board of directors’ was perceived as more appropriate for larger companies with external shareholders, and to be about compliance rather than business building. A typical response was that a board was a luxury that could not be afforded.”

Overall, Coulson-Thomas considers: “There is a need for the controlling shareholders of smaller companies to better understand the role and potential contribution of an appropriate board. If certain concerns were addressed developing effective boards of competent directors could become a cost-effective way of encouraging and supporting the development of businesses beyond the limitations of the perspective, ambition and timescales of their founders.”

In his work to help entrepreneurs build their businesses Coulson-Thomas has found many positive examples of the contribution the right board can make: "Non-executives can make excellent mentors. They can contribute the personal growth of entrepreneurs. Some women entrepreneurs going into business later in life find they can open doors. Potential investors in a business should look carefully at the calibre and commitment of its board."

The Professor suggests: “Greater involvement with boards might also encourage successful entrepreneurs to seek non-executive roles on the boards of other companies. This could enrich the gene pool of potential directors and counterbalance a tendency for some boards to become more risk averse and less entrepreneurial as a consequence of corporate governance and regulatory considerations.”

Key findings of Professor Coulson-Thomas’ continuing investigation into why some companies are more successful than others are summarised in his forthcoming book: ‘Winning Companies, Winning People’ which can be obtained from Kingsham Press: Tel. +44 [01243 779378; Fax. +44 [01243 779078; or online at www.akdpress.com

Other guides for ambitious entrepreneurs by Colin Coulson-Thomas and based upon the investigation’s findings are ‘Individuals and Enterprise’ and ‘Shaping Things to Come, strategies for creating alternative enterprises’ which can be ordered from Blackhall Publishing (Tel: 00 353 1 2785090; Fax: 00 353 1 2784446; or online at www.ntwkfirm.com/bookshop) and ‘The Knowledge Entrepreneur’ which can be ordered from Kogan Page (Tel. 01903 828800; Fax. 020 7837 6348; or online from www.ntwkfirm.com/bookshop

Colin Coulson-Thomas, Professor of Direction and Leadership at the University of Lincoln and an experienced chairman of award winning companies, has advised over 100 boards on director, board and corporate development and spoken at over 200 national and international conferences in over 25 countries. He can be contacted by Tel: 00 44 (0) 1733 361 149; Fax: 00 44 (0) 1733 361 459; and via www.coulson-thomas.com

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