Do you want hands-on board members? Yes: borrow a tactic from the private equity industry: seek out directors for your public company board who can play the role of an 'operating partner'--and watch corporate performance improve.

• Author: Salzman, Eric
• Position: BOARD COMPOSITION

In an environment of increasing global competition, constant technological innovation, and greater shareholder activism, public company CEOs who partner with hands-on, active board members can better drive equity value creation.

Board members spend a significant amount of their time on governance and oversight--e.g., approving budgets, choosing auditors, reviewing operational and financial processes and controls, determining executive compensation, developing CEO succession plans, and ensuring proper SEC disclosure. While these tasks are critically important to the proper functioning of the corporation and the protection of shareholder interests, board members and CEOs should dedicate more of their time collaborating directly on strategic and tactical issues.

By partnering with their board members to develop business strategies, create key performance indicators, explore M&A opportunities, and optimize investor positioning, CEOs expand the intellectual and professional resources available to the company to address critical corporate goals. In addition, for small and mid-cap companies, which generally have a more limited management bench, board members can extend the analytical bandwidth of the company and assist the CEO with long-term or bespoke strategic projects which, at times, are crowded out by nearer-term priorities.

Valuable assets

Board members who are willing to devote the time and effort to deeply understand the operational aspects of their businesses become valuable assets to the CEO and the company. Board members who, for example, attend internal product training sessions, sit in periodically on executive staff meetings, observe the customer sales process, and attend trade shows and investor conferences are better able to synthesize and report relevant information and insights back to the CEO and the board, thereby improving corporate decision making.

Some may question whether this hands-on board member approach threatens board independence and crosses the bright line between board and management responsibilities. While independence and objectivity are critical for nonexecutive board members to fulfill their fiduciary duties, I would argue that many board members are too removed from the facts, details and context of important strategic decisions.

For example, it is not uncommon for board members to receive board materials a few days prior to the board meeting and be expected to offer value-added feedback and to approve key...