MedCity Influencers

Best practices for running a board meeting: What healthcare entrepreneurs need to know

Every lawyer knows that, in a courtroom, one should never ask a question one does not know the answer to. The same holds true for a CEO holding a board meeting. Preparation, such as holding one-on-one meetings with board members ahead of the event, is essential.

If you are a founder or CEO, creating and managing your board is one your most essential responsibilities.  During the first three articles in this series, we addressed different aspects of board creation and interaction starting with when to create a board, recruiting for that board, and addressing ways to build trust. 

That brings us to logistics and best practices for preparing, organizing, and running board meetings.  

No surprises: The meeting before the board meeting

Startups typically hold board meetings once every two to three months, though this varies with the stage and needs of the company. You should be in regular communication with your board between board meetings, sending out flash-style updates on at least a monthly basis. There should be absolutely no surprises during the actual board meeting.  Interim board calls may be warranted when critical issues are evolving in real time.  Hold the board meeting before the board meeting by scheduling one on one calls with board members to get both input and buy-in.  This enables you to socialize critical issues, review the agenda, and solicit feedback beforehand. Every lawyer knows that, in a courtroom, one should never ask a question one does not know the answer to. Same goes for a CEO in the boardroom. 

Send board materials before the meeting

Send board materials at least two to three days in advance. These typically include the board deck, minutes from the prior board meeting, updates to financial statements/projections, and the agenda. Sending the deck out the day or night before is simply bad form. Minor changes to the deck are expected.  

Inter-board member relationships and board dinners

Inviting board members to a dinner the night before the meeting can have many benefits, notwithstanding cost considerations.  If this can’t be done in an appropriate, socially distanced manner, consider doing it virtually.  Sending your board members a good meal via UberEats or Grubhub for a virtual dinner is a nice touch.  

Enabling social interaction between board members can be valuable on multiple levels. Board members who come to know and like each other in a social setting are more likely to develop a sense of trust.  Eventually, they may be on opposite sides of an issue and the discussions can become highly contentious. For example, Series A investors who are in at a low valuation may be ready to exit when an offer appears, while Series B investors, in at a higher valuation, may want to keep building value.  People who know and like one another are far more likely to engage in an amicable productive discussion.  Founders who get caught in between board member disagreements can quickly feel like a human ping pong.  

Additionally, social interaction can enable bonding between your team and the board that yields a sense of comradery. Despite these benefits, paying for dinners or extra hotel nights obviously does not make sense if you are short on cash.  

Board votes

For early stage companies, every board vote should be unanimous.  During my 25 years of working with dozens of startups, I have never witnessed a board vote that was not unanimous.  That is not to say there were no hotly contested, emotionally charged issues.  Resist the temptation to steamroll over contentious board members even when you have the votes to do it.  Work to reach a compromise in order to avoid any no votes.  Creating enemies or contentious board relationships never pays dividends.   

The board book

A board book includes all resolutions and consents authorized by the board along with the minutes from each meeting.  For example, these might include consents approving stock options for a new employee or authorizing the budget for the next fiscal year.  The board book provides traceability and avoids future ambiguity.  

Keeping the board book complete with fully executed documents that contain all required signatures is a basic tenet of good governance. Further, new investors and future acquirers may review the board book as part of their standard due diligence. To them, a complete board book provides a record of a consistently involved and conscientious board. The absence of such or an extended period of quiescence is a red flag. Many founders don’t make this a priority, and then try to forensically create a complete board book.  This can be painful and is easily avoided by keeping the board book up to date.  

Board minutes

Board minutes serve to document and memorialize decisions and authorizations from every formal board meeting. Someone must be tasked with keeping the minutes for the duration of the meeting. That can be outside counsel or the CEO and is probably not an employee.    

The minutes should be intentionally sparse of detail.  They should document the date, time, and location of the meeting, the names of attendees, general topics of discussion, and authorizations granted by the board.  Not much more is needed which is why they are usually only one to two  pages in length. Detailed or negative information may later prompt questions by future investors or acquirers during a diligence process.  Minutes are also discoverable during litigation, thus can create unintended legal exposure.  For example, rather than saying the board discussed a delay in the product release date and a new deadline was set, simply say a discussion ensued regarding the timing of the development plan. One of the most common phrases in board minutes is, “The board discussed XYZ, and a discussion with the management team ensued.”

Board meeting follow-up

Send a brief summary of action items discussed during the BoD meeting.  Make it clear who is responsible for completing the tasks and by when.  Follow-up on the list and review it again during the next meeting.  

Final thoughts

Relationships are the fuel that powers the entrepreneurial ecosystem.  And none are more important than those with your board of directors.  Your board can be the wind at your back or the boat anchor around your neck. The board can also have a significant impact on the management team’s quality of life.  A thoughtful approach to compiling and managing your board can truly be the difference between success and failure.  There are many other good references on this topic, including a book by Martin Coyne II, called How to Manage your Board while your Board Manages You.

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.