The story of Steve Jobs’ tumultuous tenure at Apple—and the pivotal role played by the company’s board of directors in an at times bumpy ride—is now part of business folklore: a clash of personalities, a struggle for control, and ultimately, a realization that the business needed Jobs’ magic touch back at the helm.
While much attention is given to the boards of public companies such as Apple, private company boards face similar challenges, and can equally benefit from adopting best practices. As private companies navigate the complexities of today’s business environment, their boards of directors play a crucial role in ensuring effective governance, strategic decision-making, and long-term success.
Take the example of Publix Super Markets*. The largest employee-owned grocery chain in the United States (employees and former employees own an estimated 80% of the company), Publix represents a successful private company with a board that has expertly helped steer its achievements since its humble beginnings in 1930.
Publix is renowned for its emphasis on customer service and employee satisfaction, and is responsive to the need for strategic pivots. The company has been recognized for its progressive employment practices and community involvement, and its board exemplifies a savvy approach of aligning with employee-owners, injecting fresh outside perspective, and ensuring consistent strategy execution over many years.
From setting clear goals to navigating risk, a strong board of directors acts as a guiding force, ensuring the right decisions are made and a company stays on track for positive long-term performance. Without a well-functioning board, even the most brilliant ideas can go off the rails.
Drawing lessons from Apple and Publixs’ journeys, here are some critical best practices that private company boards should embrace to be effective:
- Clear Mandates: Define what the board is expected to accomplish, including milestones and important dates. Think about succession planning and key financial goals.
- Strategic Planning: Focus on deep strategic discussions beyond quarterly results and compliance. Whereas public companies commonly face the pressures of ensuring short-term profits, private company boards have the opportunity to consider longer-term factors affecting their organizations.
- Member Recruitment: Recruit diverse board members with complementary skills and expertise. Consider industry knowledge, functional experience, and strategic thinking.
- Leverage Committees: Establish committees (e.g., compensation, audit, governance) to address specific areas.
When operating effectively with the right mandates and members, a board provides the right direction, strategic vision and course corrections needed to guide an organization towards great achievements. Lack the proper board leadership, however, and even the most promising venture can veer off track with catastrophic consequences.
Critical functions your board should be performing include:
- Approving Strategies and Financial Objectives: Boards should actively participate in shaping the company’s strategic direction.
- Advising Management: Directors provide valuable insights and guidance to management.
- Risk Management and Compliance: Boards must assess and manage risk effectively.
Getting board governance right is imperative: the rise, fall and resurgence of Apple, and the long ongoing success of Publix underscores just how critical the power and influence of a company’s board of directors can be in determining its accomplishments or failures.
To ensure your organization’s board is a catalyst for success—not a potential pitfall—tap into the expertise that RoseRyan and its parent company, global talent advisory firm ZRG Partners, can provide. Reach out to us today to find out how we can help.
