As an entrepreneur, I have had amazing Board Members and terrible ones.

Then I became one. But there was no manual, so I made a lot of expensive mistakes.

After 1,000+ board meetings, I decided to write one.

Here’s Good Director/Bad Director:

Good Director knows they only have two jobs:

1. Hire and compensate the right CEO.
2. Approve the budget and strategic plan.

Bad Director thinks their main job is to provide good ideas. They think the board’s job is to micro-manage the CEO.

Good Director knows that things always go wrong. They make it safe to share bad news and simply ask: “So what are we doing about it and how can I help?”

Bad Director loses their temper and berates management when they get bad news. They incentivize management to hide bad news.

Good Director hits a home run once or twice a year. Typically a recruit, strategic partnership, new investor, etc. They are always looking for opportunities to help.

Bad Director just shows up for the meetings and otherwise doesn’t think much about the company.

Good Director trusts the CEO completely until they don’t. Once they don’t, it is time to make a change. There’s no in between.

Bad Director constantly tests and scrutinizes the CEO, making them feel insecure in their role and always on the brink of being fired.

Good Director has extremely high standards for board meetings and communicates them clearly. That means clear presentation, timely financials/KPIs, focus on strategy not reading materials out loud.

Bad Director takes whatever management gives them as “normal”.

Good Director never undermines the CEO in front of their team. Any difference of opinion is resolved privately and with ultimate deference to the CEO.

Bad Director will be unaware of who is on the email thread or in the room and will be “fast and loose” with their words.

Good Director will request the materials 48 hours or more in advance and will have read them. They will say “We have all read the materials, so let’s dive right into the most important things.”

Bad Director will show up having read nothing and expect management to read aloud.

Good Director will recognize when they are too busy to be useful/engaged and step aside, ideally recommending someone with the time and energy.

Bad Director will be unwilling to give up the power no matter what.

Good Director knows that management can only focus on 1-2 things at once.

Bad Director forwards an article they read with the subject line: “Why Aren’t We Doing THIS?!?!”

Good Director always remembers that they are a fiduciary of all shareholders.

Bad Director looks at every decision as: “What is in it for my firm/pocketbook?”

Being a Director is a privilege and a huge responsibility.

It is the highest leverage thing you can do in business. Try your best to be the Good Director (I am still the Bad one sometimes, but I’m trying!)

Follow @XavierHelgesen for more of this sort of thing.