In my recent 8-part series of posts I examined various scenarios that may happen in a Boardroom.

As a CFO who has worked with growth companies from early stage, Venture Capital, Private Equity back to AIM listed I have encountered several different types of Board even within the same company.

One of the biggest changes when moving up to become a CFO is that of communication and stakeholder relationships. A CFO has typically a strong grounding often with a business degree but vast majority having a professional accounting qualification. They have worked across the finance department developing both planning and control skills. Much of their experience prior to becoming a CFO is internal facing within the Company. That changes as soon as become a CFO.

As a CFO you need to develop strong story telling skills. Anyone listening to a story that is a whole series of numbers will lose the message you are telling them. Whether you watch the ”The Big Short,” the “Wall Street” films or “Succession” these business-related dramas with varying degrees of truth can entertain but make you think and draw your own real-life analogies.

Jeremy Connell-Waite is someone I follow on LinkedIn. He provides great insight in how to write “Better Stories.” The Succession series had concluded, and I decided to write a short series of posts in that style myself. The posts did well from a “vanity metric” point of view but as Danny Bakhshi pointed out the “Logan Roy” character is over dominating.

In my latest 8-part series I decided to resolve this and bring it much more to how I and my peers have experienced Boards. Patrick Dunne’s book “Boards” has its own scenarios but from a Chair point of view. Tony Fish has his own take in his article “Why is data eating your culture before breakfast.”

But let us start with understanding some elements of a Board, the various roles, and relationships. It traditionally may look something like this:

1. The Chair

Role: The Chair is pivotal in steering board effectiveness and governance, acting as a mediator between the board and management, and ensuring that the board operates as a cohesive unit.

They set the agenda in collaboration with the CEO and ensure that meetings are conducted efficiently and effectively.

Potential Dysfunctions: If the Chair is too dominant or too close to the CEO, it can stifle open debate and lead to poor decision-making.

A Chair who lacks independence from management might fail to challenge the CEO effectively, leading to a lack of oversight.

2. The CEO

Role: The CEO is responsible for the day-to-day management of the company, implementing board-approved strategies, and reporting back to the board on operational performance.

They are the primary conduit of information between the company’s operations and the board.

Potential Dysfunctions: A CEO who withholds information or presents overly optimistic views can mislead the board.

Conflict can arise if the CEO resists board oversight or views it as an intrusion.

3. The CFO

Role: The CFO manages the company’s financial health, provides accurate reporting, and forecasts, and ensures that financial risks are identified and managed.

They play a critical role in supporting the board’s understanding of the company’s financial status through clear communication.

Potential Dysfunctions: If the CFO lacks independence or is too aligned with the CEO, it can lead to misrepresented financial health of the company.

The CFO’s effectiveness can be compromised by insufficient resources or pressure from other executives to present a certain financial narrative.

4. Investor Director

Role: Represents the interests of significant shareholders and ensures that the board considers their perspectives and interests in decision-making.

Often has a strong focus on value creation and strategic alignment with shareholders' expectations.

Potential Dysfunctions: Conflicts can arise if the investor director pushes for short-term gains at the expense of long-term stability.

Overrepresentation of investor interests can skew the board’s priorities away from other critical aspects like sustainability and corporate responsibility.

5. Independent NED

Role: Provides an objective perspective on issues, free from conflicts of interest associated with company management and direct financial gains.

Helps ensure that the company adheres to governance standards and that decisions are made in the best interests of all shareholders.

Potential Dysfunctions: Ineffectiveness can occur if independent NEDs are not truly independent (e.g., if they have significant business or personal ties with other directors).

They may also lack the necessary industry experience to provide effective oversight and strategic guidance.

Why Dysfunction May Occur:

Dysfunction in the boardroom often stems from a lack of clear roles, poor communication, conflicts of interest, and differing agendas among board members. Power imbalances, inadequate succession planning, and resistance to change are also common sources of issues. The effectiveness of a board relies heavily on the chair's ability to foster a culture of openness, respect, and collaborative decision-making.

What I explored in UNSPOKEN Boardroom Dynamics

In a Boardroom there is plenty said, but there is much unsaid. In a pressurised environment it may be easy to move from an aligned Board to individual self-interest. You are dealing with varying personality types. Other than the CEO, CFO, the Board is made up of external people with different values and cultures. You may have multiple shareholder investor directors each at various stages of their fund cycle and their portfolio investments performing differently. Even if the business is performing to target (which the Board collectively agrees on), if the Board is dysfunctional, the casualty too often is the CFO. But why? The CEO for an SME may still be the founder and largest shareholder. The Chair may be brought in by the Investors and may have CEO experience. The NED may also have industry experience as either a CEO or CFO. Other than the Exec Directors, the other Board Directors “fly in” and “fly out” no more than a day a month if that so need to be brought up to speed quickly. Is the CFO just the easier target when what may have been missing is an exceptionally strong Chair that really draws out the unspoken?

As you move from Venture Capital backed to Private Equity you will see the focus switch from less recurring revenue growth to more recurring profit to service the debt. The incentives for the Exec team and wider company also change. As move to a public company the Investor Directors are replaced by Non-Execs appointed at the AGM. The public company will have retail investors and institutional investors with different time horizons and may prefer some of the profits to distribute dividends back to the shareholders.

For those who have not seen the posts or prefer audio stories

I was set the challenge by several people in the various groups I belong to, to bring the posts together into one short story using some of the latest technology.

I put this together over the course of a day using speechgen.io to give the characters a voice and then tidied up using Canva. I looked at the other script to Video solutions out there, but they seemed geared either for short video or a more regular professional user and some really just provide stock images in a slide format.

You can see the result on the YouTube link: https://youtu.be/6cUlfv8Qx_8

As a #Chair, #CEO, #CFO, #NED or institutional investors from #VC and #PE love to hear your thoughts on what you like a FUTURE Board to look like as opposed to the current one.

To future CFO’s it may seem a little Mission Impossible “Your Mission, Should You Choose to Accept it.” But it is a rewarding challenge and one I enjoy in helping build great companies,

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Please contact me if you are looking for a CFO in a growth technology business either by LinkedIn or www.CFOValue.uk and we can have an initial discussion.