Without intending to be disrespectful, not all highly skilled or experienced directors will be suited to a startup board. For example, a director with listed company experience and strong skills in audit and risk may not provide as much value to an early-stage startup as a director with product development and fundraising experience.
The ideal skills to be held collectively by the board will change over time. They should be reviewed regularly to ensure alignment with the company’s stage, needs and strategic direction.
For more established companies, this may occur annually. However, early-stage, high-growth companies should review (and make changes to) their board composition more frequently to meet the company’s changing needs.
Boards will often use a skills (or composition) matrix to undertake this review. This will consist of assessing the level of current experience each director has in various skill areas against the ideal skillset of the board collectively. This will highlight any key skill gaps.
Founders would also benefit from developing a skills matrix to assist with recruiting for their first board of directors or reviewing their board composition on an ongoing basis.
How to develop a board skills matrix
The first step is to determine the ideal skillset of the board based on the stage of the company, its needs and strategic direction. Specific skills will be more important at different stages of a company.
For example, a company in the startup stage might place a higher priority on CEO or entrepreneurial experience over financial management skills. However, this might be the opposite for a company in the growth stage.
Need help with this first step? You can access our FREE startup board framework to help you identify which skills might be more important at a particular stage of your company.
Secondly, assess the skills and experience of existing board members. In the startup stage, founders will likely be the only board members, so they need to assess what skills and experience they bring to the table. Keep the rating scale simple by using, for example, a demonstrated skill level of high (3), medium (2), low or none (1). This can be enhanced over time.
The first two steps will identify the existing skill gaps. For example, the founding board members collectively may have strong industry experience, customer discovery and market development, and product development skills. However, they have limited strategic, CEO, entrepreneurial, and financial management experience. In that case, these are skill gaps on their board. This is represented in Table A.
Table A: Example of skills assessment of existing board members (founders)
Recruiting for new directors
Next, assess the recruitment priority for each skill area based on the identified skill gaps and the level of importance assessed in the first step. Based on the preceding example, strategy and CEO or entrepreneurial experience are considered high-priority skills. However, financial management experience is regarded as a low priority for a company in the startup stage.
As such, when recruiting new directors, the focus should be on strategy and CEO or entrepreneurial experience (as highlighted in Table B).
Table B: Example of recruitment priority based on identified skill gaps and level of importance
The final step is to evaluate whether potential candidates are suitable to fill key skill gaps on the board. Table C shows that both candidates have strong skills and experience in certain areas. However, using the same example above, Candidate A possesses strong strategy and CEO or entrepreneurial experience (high recruitment priorities). In contrast, Candidate B has strong experience across several skill areas, all of which are low recruitment priorities. As such, Candidate A will be the preferred candidate in this example.
Table C: Assessment of potential candidates
The process outlined above applies equally to startup boards as it does to any type of governing board. Using a board skills matrix will ensure that founders identify the ideal skillset for their board based on the company’s stage, needs and strategic direction. They should recruit the right director to their board based on identified skill gaps.
A warning: Don’t fill your board seats with directors who do not meet your company’s requirements, no matter how experienced they might be.
Contact us to learn more about our Building Better Boards Masterclass, which includes an interactive skills matrix tool to assist you with identifying and recruiting the right directors for your board to ensure you set up a winning board.
If you need assistance recruiting new directors, then consider engaging the services of a specialist director recruitment firm. Do your own research to find one that suits your requirements, or contact us at firstname.lastname@example.org, and we’ll put you in touch with our recruitment partner.