How to Build a Board From Scratch

By Adrian Lawrence FCA, founder of NED Capital · Part of the Board Governance Hub

Building a board from scratch — whether for a scaling company professionalising its governance, a business preparing for investment, or a new organisation establishing itself — is a different exercise from filling a single vacancy. You are not appointing a director; you are designing a board: deciding how big it should be, what mix of executives and non-executives it needs, which roles and committees to establish, and in what order to appoint. Get the design right and you create a board that strengthens the business for years; get it wrong and you build in imbalances that are difficult and slow to correct. This guide sets out how to build a board from scratch: the principles of board composition, the roles to consider, how to sequence the appointments, and the balance to aim for.

It is written for founders, chief executives, investors and boards constructing a board, and draws on NED Capital’s work building and strengthening boards across growing, private equity-backed and established organisations. Every search is led personally by Adrian Lawrence FCA.

Start From Purpose, Not People

The temptation when building a board is to start from the people available — the founders, the investor’s nominee, a well-known name who might join. The discipline that produces a good board is to start instead from purpose: what does this business need its board to do, and therefore what must the board contain. A board’s job is to provide strategic direction, oversight, governance and accountability, but the specific emphasis varies with the company’s situation — a business preparing for a sale needs a board built for that, a scaling company needs a board that can guide growth, a regulated firm needs a board that can satisfy its regulator. Defining the board’s purpose first, and then designing its composition to serve that purpose, is what separates a coherent board from a collection of individuals. The UK Corporate Governance Code and, for smaller companies, the QCA Code offer principles of good board composition worth drawing on even where they do not formally apply.

Decide Size and Composition

The first design decisions are how big the board should be and what it should contain. Board size is a balance: large enough to bring the range of skills and perspectives the business needs and to staff its committees, but small enough to remain a genuine decision-making body rather than a talking shop. For most growing companies a board of somewhere between five and nine members works well, though the right number depends on the business. Composition is the more important question — the balance of executive and non-executive directors, the proportion who are genuinely independent, and the specific skills and backgrounds around the table. A well-composed board combines executives who know the business intimately with non-executives who bring independent perspective, and covers the skills the business needs: financial expertise, sector knowledge, relevant functional experience, and increasingly digital, regulatory and people capability. A board skills matrix is the tool for mapping what the board needs against what each appointment provides, and it is invaluable when building a board from nothing.

Choose Which Roles to Appoint

Building a board means deciding not just how many directors but which roles. The chair is the foundational appointment — the person who will lead the board and shape its culture — and getting the chair right first often makes the rest of the board-building easier, because a strong chair can help attract and assess the other directors. Beyond the chair and the executive directors, the non-executive appointments should be chosen to fill the specific gaps the board’s purpose implies: a finance-qualified director to chair the audit or finance function, directors with the sector or functional expertise the business needs, and, where the company’s scale warrants it, a senior independent director. As the board grows, committees follow — an audit committee, and in due course remuneration and nomination committees — each needing a chair with the right expertise. Deciding which of these roles the business genuinely needs now, and which can wait, is part of building the board sensibly rather than over-engineering it. Our guides to appointing a chair, a non-executive director and a senior independent director cover each role.

Sequence the Appointments

A board is rarely built all at once, and the order of appointments matters. A sensible sequence usually begins with the chair, because the chair helps shape and attract the rest of the board and sets its culture from the start. With the chair in place, the most pressing non-executive gaps come next — typically a finance-qualified director and any director bringing expertise the business critically needs. Further appointments follow as the board’s needs become clearer and its committees take shape. Building progressively has real advantages: each appointment can be assessed against the board as it is actually forming, the composition can be adjusted as the business evolves, and the board is not lumbered with appointments made all at once against an untested design. It also avoids the trap of over-building — appointing a full slate of directors and committees before the business genuinely needs them, which adds cost and process without benefit. Build the board the business needs now, with a clear view of how it will grow.

Get the Balance Right

The quality of a board lies as much in its balance as in its individual members. Balance between executives who know the business and non-executives who bring independent perspective. Balance of skills, so the board collectively covers what the business needs rather than over-indexing on one kind of expertise. Balance of background and perspective, because a board of people who think alike — however individually able — provides weaker challenge and poorer decisions than a genuinely diverse one, which is why diversity of background, experience and perspective is a matter of board effectiveness and not only of principle. And balance of temperament, so the board combines people who challenge with people who build consensus. When building a board from scratch you have the rare opportunity to design this balance deliberately rather than inheriting it, and it is worth using. Our guide to board structure, composition and independence explores the principles.

Run the Searches and Build for the Future

Building a board means running several appointments, and doing so coherently. Each appointment deserves the rigour of a proper search — a clear brief, a field that reaches beyond the founders’ and investors’ immediate networks, and a genuine assessment — but the appointments should also be run with the whole board in view, so that they complement rather than duplicate one another. A search partner building a board, rather than filling isolated vacancies, can assess each candidate against the emerging whole and help ensure the board comes together as a coherent, balanced body. It is also worth building with the future in mind: establishing good governance practices, planning for how the board will evolve and how directors will eventually be refreshed, and setting up the board evaluation and succession processes that keep a board effective over time. A board built thoughtfully from the start, with an eye to how it will grow and renew, is a lasting asset. Our guide to board succession planning covers the longer view.

Common Mistakes to Avoid

Building a board from scratch goes wrong in characteristic ways. Starting from available people rather than from the board’s purpose, and assembling a board that does not serve the business’s actual needs. Building too big or too fast, and over-engineering a board and committee structure the business does not yet need. Neglecting balance, and creating a board that is too executive-heavy, too narrow in expertise, or too uniform in perspective to provide real challenge. Appointing everyone from the same network, and building in a lack of independence and diversity from the outset. And filling the seats without a coherent design, so the board is a collection of individuals rather than a functioning whole. Each is avoided by the discipline this guide describes: start from purpose, design the composition and balance deliberately, sequence the appointments sensibly, and build the board the business needs with a clear view of how it will grow.

NED Capital | Sister practice of FD Capital | ICAEW practising certificate held by Adrian Lawrence FCA.