Joining Board Hard Soft Factors

With today’s competitive market, executives aspiring to be a non-executive director can expect a considerable effort before making it to the short-list interview stage and are then tempted to accept an offer irrespective of any warning signs.

Nomination committees understand that all new directors come with some risk, so trust is a major factor. But trust, respect and risk go both ways.

Given the ante, where should aspiring directors draw the line? What are the ‘deal breakers’ for joining a board?

The following may help with more thoughtful deliberations:

Calibre of management: is management competent to run the business and are ethical values aligned at executive and board level? These are two areas you would not want to compromise. Have you asked of any significant disputes affecting the company and are you satisfied with the board’s stance? Does your review of the financial statements; recent management accounts and forecasts raise unsatisfied concerns? Do you believe in the mission of the business and the capacity to deliver?

Board composition: it is best for the board to consist of a mix of functional expertise, industry experiences, qualifications, ethnicity and gender for diverse perspectives on complex and wide-ranging issues. How does the board assess, renew and replace directors? Are there any gaps in the skills matrix or the nominations process to trigger a concern? Is there sufficient talent to allocate to the various committees? Is the Chair a skilled leader and facilitator?

Board dynamics: will you fit in, learn and enjoy the interactions? Is there shared integrity, trust and respect? Have either your discussions or review of recent board agendas, papers and minutes indicated a balanced board, or a poorly led board, a divided board, concentration of power or a board in difficulty? Are differing viewpoints respected or are people labeled and alienated? Why do directors resign? Are there procedures in place for dignified resignations? Has the Chair set the tone and norms on ‘how we work’ in meetings and outside the boardroom? If you doubt you could work comfortably with the Chair, other directors or the CEO, then don’t.

Contributions valued: respect from, and of, your fellow directors is needed to be effective. Are you clear why you are being invited to join the board and are you confident you bring what the board expects in terms of commitment, skills, diligence or care? Is what you are good at, better than others at the table or adds a strategic advantage to the skills matrix? Is the committee role complementary to your professional skill? Will you get the orientation and support in the early stages to avoid a false start?

Strategic vision: does the board have a strong focus on validating a strategic plan that creates shareholder and customer value? Is there a fundamental decision with long-term impact, perhaps on strategy, which you could not support? Does the board know how the roles of management and the roles of governance differ?

Engaged directors: commitment, preparation, transparency and openness to raise matters are key factors. Is there productive participation and questioning? An indicator of the strength of the board is its willingness to deal with under-performing or disruptive directors either through coaching or an annual board evaluation. Are growth opportunities being taken or are they playing it safe?

Earned reputations: weigh reputational risk against the exposure of solving difficult challenges. Naturally, you would want a sound industry, business model and track record. You would also want the Chair and fellow directors to be of high-calibre with strong profiles.

Thought leadership: you would want to make sure issues are approached with intellectual rigour and the board willingly searches out best practice. You would also want a Chair who keeps a focus on what is material. Are broader drivers of business success, like succession and talent, as critical for the board agenda as strategy, governance, technology, marketing or financials?

The key advice is: know what information you need to discharge your responsibilities and how to obtain it. Do thorough due diligence and proceed with caution as after you join a board it is difficult to maneuver a stress-free exit without suspicion.

Joining a board has significant responsibility and privilege.

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Don't be tempted to accept a board role if there are doubts. Do due diligence of both hard and soft factors.