When thinking about potential board members, consider the following:

• Are there experts in your industry that would enable you to leverage their expertise or relationships as board members?
• As most companies are dependent on financing, is there a local banker that could sit on your board to provide a lender’s perspective?
• How about local business people that could bring experience and a rolodex of connections to the company?
• Include at least one founder on the board to keep the dream alive, but don’t stack the board with all the founders.  You want a diverse set of directors — not too much concentration with one group.
• Include a venture capitalist on the board.  They are great for strategy, financing, relationships, fiscal responsibility and process.  However too many VC’s can be a problem for the same reasons!
• Include a marketing expert — this will counterbalance all the linear thinkers on the board.
• Independence, Independence, Independence!  I can’t say this enough.  Having board members that are independent of the business and the executives will help facilitate a 360 degree view as well as hold executives accountable.

In addition, there are some obvious choices that may not be your best bet:

• Company Counsel.  While it may seem quite convenient to have company counsel sit on your board, this may be detrimental in the long run when that attorney has a conflict of interest and must withdraw from both roles.  In addition, the line between business advice and legal advice gets blurred when company counsel sits on the board.  This presents issues when trying to protect conversations under the attorney-client privilege.
• Your Spouse.  Mixing marriage and business can be a very difficult balance to strike.  If you have achieved it, congratulations!  Unfortunately, many of these relationships turn sour in one way or another.  You should think long and hard about mixing these important relationships.  If you decide to proceed, be sure to work with an attorney to correctly structure the business relationship.
• High Profile Board Members.  Typically, these people are over-committed and cannot give the time and energy needed as an active board member.  Try finding other roles for these people, like a strategic advisor, spokesperson or coach.

The more strategic you can be when composing your board, the more beneficial your board will be to the growth and success of the company.  Be sure to check back for more posts on corporate governance matters.

What do you think?

(Hat Tip: Michael Mason Norman, ED.D. — Thanks!)

Bottom line:  make sure you take appropriate precautions to erase the hard drive when you get rid of your digital copier.

If you do not timely file annual registrations, you run the risk that the Secretary of State may administratively dissolve your entity.  More importantly, if you do not follow proper corporate formalities, such as holding annual meetings, keeping accurate minutes and updating other corporate records, you subject your personal assets to potential liability through corporate veil piercing.  The veil of a company’s separate existence is pierced and the owners exposed to personal liability when a court determines a debt is not really a debt of the company, but ought, in fairness, to be viewed as a debt of the owner.  While there are many factors for piercing the corporate veil, failure to follow corporate formalities is a typical factor.

Annual corporate maintenance is certainly something you can do on your own, if you like.  Alternatively, you can engage your corporate attorney to assist.  It should not cost a fortune — in fact, I typically offer a flat fee annual maintenance package.  Whether you do it yourself or engage an attorney, I suggest you spend a few minutes thinking about annual corporate maintenance before the year ends.  It is also a good opportunity to do a general check-in with your corporate counsel on other business and legal matters.  You will then be ready to ring in the new year!

In the past, most courts have treated corporate computers, and anything on them, as company property. However, in recent rulings, courts have begun to investigate the circumstances around disclosure of policies to employees and other factors. For example:

• In New Jersey, an appeals court ruled that an employee of a home health-care company had a reasonable expectation that email sent on a personal account wouldn’t be read.
• In San Francisco, a federal appeals court ruled that employers that contract with an outside business to transmit text messages can’t read them unless the worker agrees.

While it is probably too early to make any sweeping generalizations about this trend, it certainly suggests that employers need to review their policies, practices and training to make sure they do not run afoul of this evolving issue.

If you simply look at the typical business model of a law firm, you see that the business model is not congruent with alternative fee arrangements.  Most traditional law firms (small or large) compensate attorneys on billable hours; measure achievement and advancement on billable hours; pay bonuses on billable hours; maintain minimum thresholds for billable hours; and base many other firm metrics on billable hours.  Every aspect of the firm business model is grounded in the almighty billable hour. So, how can a firm turn on a dime and effectively implement alternative fee arrangements — they can’t.

Don’t get me wrong, there is certainly a place for the billable hour business model.  The problem is, with the economic downturn, many firms have decided to jump on the alternative fee bandwagon.  Unfortunately, when your entire business model is based on the billable hour, you can’t implement an alternative fee structure without a major business model change.  If you are looking for a firm that embraces a more client-centric alternative fee structure, make sure the firm you select embraces a different business model as well.  Otherwise, you might be experiencing exactly what the above observer predicts!

Social media is one of the hottest topics today, with the pros and cons of its use being debated in board rooms nationwide. In light of recent restrictions on employees’ social media use (ESPN, Marine Corps, NFL), companies are discussing whether, how and to what degree they should restrict or encourage their employees to use social networking tools. This webinar will offer insight into business leaders’ views and perceptions on this issue and will provide actionable recommendations and advice on the development of social media policies and employee training sessions.

Led by Carol Russell, CEO of Russell Herder, and David Baer, president of Ethos Business Law and one of Minnesota Lawyer publication’s Attorneys of the Year, the webinar will also highlight the insights gleaned from the recent national study conducted by the two firms on social media trends in the workplace and policy adoption.

Sign up for this free webinar here.

In advance of the webinar, we invite you to submit questions and suggestions for topics to be covered in the presentation under Comments.

Recent research conducted with Russell Herder found eight in 10 businesses have concerns about the potential liabilities of social media. Yet, only one-third have a policy in place to govern social media use, and just 10 percent said they have conducted relevant employee training.

Instead of ignoring the need for responsible guidelines, organizations of all sizes should begin to define their strategy regarding social media, and most importantly, the rules for employee engagement. By doing so, management can take advantage of the benefits offered by these new communication channels while mitigating undue risk.  But remember, social media is a far different animal than traditional technology. A company’s current policies on IT matters are usually not sufficient.

All companies are different, thus the rules for creating and implementing a social media policy are not universal. They must take the form, substance, philosophy and culture of the organization to which they apply. However, the following are some important elements to include in a good social media policy:

• Overall Philosophy. An effective social media policy should define the company’s overall philosophy on social media and be consistent with its culture.  For example, does the company have a supportive, open philosophy on the use of social media or a stronger, more limited embrace of this technology?
• Honesty and Respect. One of the most important aspects of a policy is a requirement that employees be open, honest, respectful and transparent in their usage of social media – especially in the business context.
• Focus on Job Performance. There is a lot of discussion on whether social media hurts worker productivity.  For example, is it acceptable for an employee to post on a personal blog during their lunch break?  Or, can an employee tweet on business-related topics during the work day? Remember, the new work force does not live in an eight-to-five world. The focus should be on job performance instead of “company time”.
• Avoid Conflicts of Interest. Conflicts of interests come in many forms – especially when engaging in social media.  The policy should discuss how to identify potential conflicts of interest, what types of conflicts are prohibited and who to talk to when in doubt.
• Include a Disclaimer. Employees should make it clear that their views about work-related matters do not represent the views of their employer or any other person.  The policy should require a disclaimer, such as the following, when there is the possibility for confusion between business and personal identity:  The views expressed on this blog are mine alone and do not represent the views of my employer or any other person.

While this list is not exhaustive, it serves as a starting point to develop a strategy and policy around social media that can serve to protect corporate interests, yet allow employees to further an organization’s overall social media goals.

To download complete research findings and full list of tips for developing social media policies and employee training, find it here.

Recent research conducted with Russell Herder confirms that confidence exists in social networking as viable communication outreach, but so do worries about the potential liabilities involved. Concerns regarding social media use were acknowledged by some eight in 10 businesses participating in the national study, which was conducted over the month of July.  Fifty-one percent fear social media could be detrimental to employee productivity, while almost half (49%) assert that using social media could damage company reputation.

Despite these apprehensions, social networking is being viewed as a key strategy. According to survey results, eight in 10 senior management, human resource and marketing executives believe social media can enhance relationships with customers/clients and build brand reputation. Almost 70 percent feel such networking can be valuable in recruitment, as a customer service tool (64%) and used to enhance employee morale (46%). The most popular vehicles being used include:

Much of senior management’s direct experience with social media appears to be reactive versus proactive, an interesting fact given the confidence they express in these new mediums. The majority (74%) of executives surveyed said that they, personally, visit social media sites at least weekly to read what customers may be saying about their company, and routinely monitor competitors’ use of social networking. One in three search social media sites to see what their employees are sharing; or check the background of a prospective employee (25%).

Social media has delivered incredible potential to build relationships, increase organizational effectiveness and grow brands, but its use is clearly raising questions in the board room. Should employees be encouraged to use social networking to enhance marketing outreach? Or will such activity impede productivity in an already tight economy? And what about reputational risk?

Rather than bypass the social media opportunity, organizations should embrace it while taking steps to educate their team about internal guidelines and best practices.

Yet, remarkably few efforts are being made to mitigate the risks. Only one in three businesses surveyed by Russell Herder and Ethos Business Law have a policy in place to govern social media use, and only 10 percent said they have conducted relevant employee training. Why? One of the main reasons, according to respondents, is uncertainty about what to include in such policies.

So what should be included in a good social media policy? Be sure to read about the key elements in our upcoming blog post.

How does your organization handle social media? What do you do to mitigate the risks? We’d love to hear about your experience, so be sure to leave your comments.