A tool for supporting the company's development, the board - or advisory council - is not compulsory when a company is set up, although it is strongly recommended.
Depending on their legal status, some companies are required to have a board of directors. While simplified joint stock companies (SAS) can dispense with this requirement, public limited companies (SA) are obliged to do so under the French Commercial Code. "Listed companies are obliged to include independent third parties on their boards of directors," explains Fernando Alvarez, partner at KPMG and national director of the advisory partners for VSEs and SMEs. The French Commercial Code also states that "the Board of Directors shall be composed with a view to achieving a balanced representation of men and women". The proportion of each sex may not be less than 40% in large companies (over 250 employees and turnover of €50 million).
Bringing managers out of their isolation
With or without an obligation, it is strongly recommended to surround yourself with a board. "While the board of directors is a formal governance tool, the advisory board is a body created by the executive, without constraint", Fernando Alvarez points out. The former represents the shareholders and has decision-making and control powers (which it does not always exercise), while the latter is merely advisory. In both cases, the company director has a lot to gain.
"The board is an external advisory body that provides advice and guidance, without judging, but supporting the company director and, above all, preventing him or her from being isolated", says Pascal Chevalier, Chairman of NetMedia Group and owner of Be a Boss, among other companies. According to this entrepreneur, "its members don't necessarily need to have in-depth knowledge of the company's market, as they bring a vision to the table". By bringing their peers together, managers benefit from sharing experiences. "The effects are positive, with complementary skills and frank conversations," says Fernando Alvarez.
Natacha Hochet-Raab, Managing Director EMEA, US and Japan at Fred (LVMH), and a member of the Board of Directors of the Essec Alumni Association, is currently applying to join the board of an investment fund. "It's interesting to be involved in a sector that's different from the one in which I operate - luxury goods - and to bring an outside, objective viewpoint to management, because I have the necessary distance and experience as the CEO of a company", she explains.
For the CEO, there is no question of mixing operational functions with the role of a board member. There could be a conflict of interest. On the other hand, sitting on a board ensures that the major issues are dealt with correctly, without abuse, and in accordance with the company's ethical rules: CEO remuneration, sustainability, value sharing, the raison d'être of a company with a mission, etc. "I choose projects for which I am in favour.
"I choose projects where I can add value".
Former CEO of Smartbox, Paola Piancola sits on several boards in France and abroad. "The directors call on me for my expertise, because I've been with Smartbox through every phase of its development, from the Italian subsidiary's sales of €0m to €120m and the Group's sales of over €450m, as well as the roll-out of the business in 11 countries", she confides. In 2021, she will join the board of La Casa, a shared housing operator, and in 2022 that of Cuvée Noire, a new café concept. "I choose projects that I can really add value to and that I like, that are part of the lifestyle, but in a different business to Smartbox," she adds. In practical terms, she gives her opinion on the reorganisation of the teams, on internationalisation, opens her address book and even invests. Sometimes they do, sometimes they don't," she smiles.
Board: training courses exist
In some start-ups, "the leverage effect can be ultra-differentiating when the founders come from research and have few business skills. The advisory board helps them to develop the company and approach the market", notes David Boujo, Deputy Director of Deeptech at Bpifrance. This expert himself sits on the boards of technology transfer accelerator companies (SATT), which act as a relay between research laboratories and businesses. "These boards bring together members with sometimes conflicting interests - research bodies, universities, government representatives, regional players - which means you have to work to find compromises in the interests of the company, preferably with training in how to do so", he explains. There are training courses available to prepare for this role, such as the certification programmes offered by the Institut Français des Administrateurs (French Institute of Directors) and the Woman Board Ready course at Essec, which is reserved for women.
Managers may decide to set up an advisory committee during the start-up or development phase. While it may be a good idea to ensure the loyalty of its members, there's nothing to stop it evolving over time in line with the company's needs. "The board becomes really essential when the company is aiming for significant growth and its leader needs to be challenged, either because he is planning to raise funds or because he is facing a major transformation", explains Fernando Alvarez. With his nose to the grindstone, he needs some sound advice.
Identifying talent
Who should be invited to join the board? "We need to bring together people who know what they're doing, but we have to be careful not to target key players who won't come and sit on the board," says Fernando Alvarez. The idea is to create a tailor-made approach. Where can we find them? "Within your own network and ecosystem," advises Pascal Chevalier, adding that "you need to be able to get along with them. Sharing the same values.
In 2021, Bpifrance opened a platform - Tango - for setting up advisory boards dedicated to deeptech start-ups in France. Managers post their advertisements on the platform, describing the profiles they are looking for, and candidates apply. Around thirty boards have been set up. Other - commercial - platforms offer to put company directors in touch with advisors and administrators. Beyond the parity obligations incumbent on boards of directors, Pascal Chevalier observes that "wealth comes from diversity". Hence the importance of bringing in women...
Once created, the board provides its expertise 5 or 6 times a year on strategic issues. Although it is less regulated than the board of directors, "the board must have rules of procedure, if only to ensure the confidentiality of exchanges and prevent the risk of leaks", recommends David Boujo. Should its members be remunerated? "It's behind-the-scenes work, members have already succeeded, they come to give back to others rather than looking for remuneration," says Pascal Chevalier. There are a number of ways of paying compensation: directors' fees, shares in the company, etc.