How To Assemble The Perfect Board.

• Author: Madison, Rachel
• Position: Business Trends

When it comes to corporate governance, there's no one-size-fits-all solution. But factors like board composition and the decision to utilize or eliminate earnings guidance are important decisions every company must make, particularly when it comes to positioning their board for short- and long-term success.

HOW TO PICK YOUR BOARD MEMBERS

Ron Poelman, senior of-counsel attorney at Jones Waldo and Chairman of the Board of the National Association of Corporate Directors Utah Chapter (NACD Utah), says board composition is the foundation of everything. Ideally, he says, you'll want someone with some accounting or finance experience. Then you'll want someone with marketing and sales experience. Then you'll want someone with technical software experience. "Having the right mix of people on your board is really important. One thing I advise is to first start with a list of the ideal expertise [you want] on your board... then try to create a board that covers all of those."

Robert Gross, principle and founder of Robert C. Gross Associates and President of NACD Utah, says what is most important in terms of board composition is what is best for the company itself. A retail company, for example, needs a very different board composition than that of a financial services company. "Gender diversity and ethnic diversity are also becoming more important," he says. "You can think of [board composition] in two regards. One is based on skill set and one is based on demographics."

A board should also have a good mix of insiders and outsiders, Mr. Poelman says. It should be made up of some who work at the company and some who don't. That way the company benefits from inside intelligence and outside perspective. "Insiders are involved in the personal relationships of working together every day and office politics, but outside independent directors don't live in the tree, so they can more easily see the forest," Mr. Poelman says. "When you have a mix of both, the best decisions are made."

Finally, the number of board members makes a difference as well. Three members is the bare minimum, Mr. Poelman says, and beyond seven can make it difficult to reach consensus. Odd numbers help with that conundrum. If it ever comes down to a vote, majority rules.

DON'T FORGET TO THINK ABOUT YOUR LONG TERM GOALS

You can guarantee that different board members will have different interests. "The day of moms and pops and retail investors owning the majority of public companies is...