Written by Shailesh Maingi, CEO & Founder, Kineticos
I’m often asked what it takes to have a great Board of Directors. An active, experienced, and thoughtful board is even more critical for a developmental biotech company. Many CEOs have terrific scientific or medical backgrounds, but often they are just inexperienced in the art of selecting and managing a board. So here are some guidelines I’ve developed over the years for running a great board.
- Limit your board size. For a development stage biotech, 5 – 7 members seem to be about right. Anything more, and communication is difficult. Anything smaller, and you’re undermanned. Remember, these are not big pharma boards. You will be engaging this team in-between board meetings as well.
- Find people who want to be active. There are plenty of people who want to join a board for the prestige or for their LinkedIn profile, but don’t want to actually work. Want a quick way to figure out who will be active? Look for people who already are. If you want to get something done, give it to someone who is always busy, as my colleague Mark Osterman says.
- Complement your expertise. Hiring for varied experience and skills is very important. If you’re knowledgeable about all the latest Immuno-oncology trends, you don’t need another person with the same skill set. Hire for your weak spots. Strive to hire individuals with Finance, Business Development, R&D, and Operations backgrounds.
- Seek out diversity in thought. Good boards diverge, at least in the beginning. They consider multiple viewpoints to align the potential actions to the company’s goals and the externals environments, and these boards converge on the few things that can drive performance. Diversity of ideas comes from having people with different perspectives. And yes, this means actively recruiting women and minorities for your board. Yes, it’s harder, but good governance demands diversity of thought.
- Find the right mix. Don’t hire just your friends. A good mix of insiders and outsiders is important. If you haven’t raised your Series A, then you have a little leeway. Likely, the board composition will change after the professional money comes in. No one will give a biotech $25m without adequate board representation.
- Personality matters. It’s not fun to work with jerks, especially knowledgeable jerks. Just don’t do it. You’ll be miserable, and so will they. But this doesn’t mean that you should hire patsies that you can steamroll. Instead, find board members who will equally challenge and support you.
- Set clear expectations. What is the mission? What is the specific role that the board member will play? How often will you meet formally? Informally? How much do you expect the board to advocate on the organization’s behalf? Be prepared to answer these questions at a minimum prior to asking someone to join the board.
- Compensate appropriately. Board work is not free work. Generally, board members are granted options or shares which vest over time, usually 3-5 years. The Chairman may get up to 1-2% of shares while board members may receive .5-1%. Of course, the greater the uncertainty, the more board members expect in upside. More established companies also compensate board members per year (usually $15,000-$25,000).
Managing a biotech has never been more complicated. Countless risks, including regulatory, scientific, funding, abound, as do the equal number of opportunities. Remember great boards help CEOs run the strategy marathon, while the leadership team sprints daily to meet the operational objectives.
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Shailesh Maingi is the Founder and CEO of Kineticos and has a passion for the role R&D plays in improving healthcare outcomes. Mr. Maingi is also an adjunct professor at the Kenan Flagler School of Business at the University of North Carolina and serves on the board of directors for a number of biopharmaceutical, diagnostic and contract manufacturing companies.