Sometimes when you are trying to figure out how to create a great board, it is best to hear success stories. And then there are times when it’s beneficial to hear about abject failure and simply learn what not to do. Linda Fonner, CFO of Edmund Optics, director of HashWatt Inc. and member of the advisory board of TrainedArrow, has experience in the latter. It helped her to recognize when she is involved with something good.
She was working as a CFO for a private company and the co-CEOs were ready to start a board … or at least she thought so. They gave her the assignment of getting it off the ground. She developed the charters and the job description, and the CEOs signed off on them. They began advertising for the opportunity and interviewed worthy candidates. When the first candidate was introduced to the CEOs, they said, “We don’t want this person on our board.” Of a second candidate, they said, “We don’t want this person voting.” A third candidate was also criticized: “We think they’re a consultant.” It was clear that her CEOs were not ready for true governance.
“I truly thought they understood the process, that they understood what it meant to have a board, what it meant to have true professionals come on as board members, not just advisors,” says Fonner. “I was so embarrassed. If you are thinking of doing that, please don’t. Make sure that the founders or owners truly understand board governance.”
Fonner has found such a company in Edmund Optics, a family-owned producer of optics and imaging. As CFO, Fonner does not serve on the board, but she works with board members on a regular basis. It is night and day from her previous experience.
“It runs just like a publicly traded company. They have a professional board and audit and risk and finance committees,” says Fonner. “They have the proper people in the right spots. When I first joined the company, I was really surprised to see the governance structure that’s in play.”
Much of that structure can be attributed to the work of Marisa Edmund, the third-generation chair and chief global marketing and sales officer of Edmund Optics. Starting with a board of strategic, general business CEOs, she has worked to stock the board with experts in areas where her business needs to grow. That may be as simple as adding a board member from a geographic area where the company is making inroads, such as Malaysia or Japan. Or it may involve bringing on an expert in an area that is giving the company a challenge, such as AI, automation or talent.
Says Edmund, “It’s that constant evolution of knowing what you need or where you need to go, and making sure you have those people.”
Edmund believes it’s important now to simply look at your board in a vacuum, but to also monitor how they work with and indeed mentor your executive team.
“I feel like right now our executive team needs mentorship in business digital transformation and the nature of true innovation,” says Edmund. “I think we all know that technology and AI are going to accelerate everything a whole lot faster than we think it will. I need to get ahead of that with the right expertise on the board and making sure we’re making the right decisions around that type of strategy.”
For Edmund, one of those decisions came when her father stepped down as chairman and CEO in 2022. Her father was in favor of her taking on both roles, but she decided on a different approach, one that involved bringing on the company’s first nonfamily CEO.
“I said, ‘Listen, we’re at a point where we have 1,300 employees, 20 sites, eight manufacturing plants, where we’ve grown it into a big, global company. I think it’s very challenging to have the chairman also act as CEO. Both deserve their own time and attention.’”
Not only did Edmund feel the separation of duties was key to time management, she also felt it was important to ensure that family dynamics were not too central to the operation of the business.
“I think for family businesses there’s a couple inflection points where you have to make difficult decisions that are best for the growth of the company,” says Edmund. “We need to have a professional management team that’s somewhat separate. It’s not the family constantly commenting on every business and strategic decision. There’s a family voice, there’s a professional management team and there’s a professional board.”
As for those professional board members, when they join the Edmund board, it is made clear to them that they are not joining a “lifestyle board.” It’s a board that uses a skills matrix to identify the most important skills needed for the future and incorporates a 360-degree review process to ensure that board members’ expertise relates to where the company is going at any particular moment in time.
“This is not a board where people do five terms. I have a board where you may do a term, you might do two terms, but more than that is not common,” says Edmund. “I think when you can set that expectation, then when you go to off-board people, it’s a whole lot easier.”