Big fish, little pond: how large-company execs best fit into smaller businesses ... and their boardrooms.

• Author: Malizia, David J.
• Position: BOARD LEVERAGE

IN MY 20 YEARS in business I have worked for, interacted with, and assessed many CEOs and managers in dozens of companies across a range of industries--large and small, public and private. Much of my energy over the years has been focused on making investments and building management teams in small companies with revenues under $20 million.

In these experiences, I have frequently participated in the selection of CEOs and developed some contrarian views on the topic. Conventional wisdom says that if you need to build a management team or hire a CEO, then you should look to hire managers who run Fortune 1000 companies. After all, if a person can successfully manage one of the world's largest corporations, then they should be able to lead a small business.

However, in contrast to that conventional wisdom, I argue that the opposite is true: Executives of large organizations may not be the best stewards of small companies, but they can be excellent advisers and an invaluable resource.

So, here are my top-five tips in developing a board and a strong management team for a small business:

1. Look for Leaders Who Can "Roll Up Their Sleeves" to Run Your Small Company -- Instead of recruiting an executive accustomed to running a large company, focus your efforts on someone with hands-on experience, an entrepreneurial bent, and the ability to relate to anyone, no matter their education, background, or position.

   Executives of large and medium-sized organizations tend to be good at delegating rather than doing. Small-company environments tend to be dynamic and require a hands-on approach to doing the work, as well as quick, impromptu decisions. In these smaller organizations, successful leaders must wear a lot of hats and lead through motivation and example, not by power, position, or pedigree.

2. Fortune 1000 CEOs and Executives Belong on Your Board -- Even though many executives of large and medium-sized businesses would make poor small-company managers, they can be an invaluable resource to the board of a small business. Senior-level executives with large-company backgrounds possess an innate ability to apply more thorough processes and structure, which is needed in a small company as it begins to grow and mature.

   As advisers to your team, these board members can help successfully engineer your company and help navigate through strategic, operational, and human resource landmines. They know what infrastructure and metrics are needed to manage those...