How a Board of Directors Can Take Your Company to the Next Level

Managing a company, be it a start-up or a mid-sized firm, is not an easy job. But, eventually, the company will grow, and you, the founder, would need help from the experts. That's where the Board of Directors will come into the picture. They help you to lead the business in the right direction and ensure that your stay on the right path.

In the past (even in the present sometimes), founders make the mistake of appointing family and friends as board members. It is a mistake as they are not trained or qualified to carry out the job of the Board of Directors. It is always better to hire experts from the outside who can help your organization to function better,

When Should You Create a Board?

When creating a Board of Directors, the timing always matters. You need to hire the Board of Directors before the end of the start-up phase and before the emergence phase. A start-up goes through four phases before it matures and survives. The first is the start-up phase, the second is emergence, the third is known as expansion, and the fourth is sustainability. If you already have a small business, you should hire the Board of Directors ASAP.

What is the Compensation of the Board of Directors?

 The compensation of the Board of Directors varies based on the type of organization it is. The compensation offered to a private company's board of directors is different from the compensation of a Board of Directors of a Public Limited Company or a Non-Governmental Organization.

Earlier, setting compensation for the Board of Directors of a private limited company was tough as there was a lack of reporting requirements (which are needed as per public company regulations). Also, studies conducted in this regard were performed in small and geographically constrained control groups with countless variables present.

According to data, the average salary of a private company's Board of Directors is US$ 25,000 to US$ 30,000 for an annual retainer. About US$ 2,000 to US$ 3,000 is for every in-person meeting and US$ 1,000 per telephone conference for total cash compensation or approximately US$ 36,000 to US$ 45,000 per year.

This compensation doesn't include the cash value of long-term incentives that are offered to the Board of Directors of private companies like options, stocks, or cash incentives. The latter can be up to 50% of the base cash compensation. Sometimes, private companies request the Board of Directors to take on more responsibilities and offer additional incentives.

Many private companies offer cash compensation to the Board of Directors for each of their service to the company. Usually, the lower the cash retainer amount, the more likely it is that the private company to offer an additional per-meeting fee to each of the board members. Similarly, the higher the cash retained amount, the lower is the per-meeting fee.

To know more about the Board of Directors, click here.

Here's something useful about being a great leader.

-by Shruti , CNS Canadian News Source



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