By Paul Dubal, Governance Coach
Joining a board can be a pivotal and rewarding point in your career. There are so many exciting opportunities to contribute to the strategic direction and future success of the company, making critical decisions at the highest levels of the organization. However, before you take the leap it is important to do so with “eyes wide-open”.
A position as a director can turn sour very quickly if you are not prepared for the challenges of the role. It is important that you conduct the appropriate due diligence, not just on the company, but also on yourself. This blog looks at the thought processes and actions you should take to ensure that you are mentally prepared and ready to contribute. It is an important step to follow if you are to thrive and gain enjoyment and satisfaction in a board role. From a personal standpoint, these are four (4) key areas to assess during your personal due diligence :
- Eligibility – There are few legal prerequisites to serve on a board of directors in Canada but some requirements should be considered. Reaching 18 years of age, not having been declared incapable under the laws of a province or territory or by a court in a jurisdiction outside Canada, nor hold bankruptcy status – are three common qualifying standards. Being an individual (versus being a corporation) is also a prerequisite. Some corporate statutes prescribe Canadian residency thresholds. Under various securities laws (generally applicable to public issuers), companies must disclose the identities of independent and non-independent directors and disclose the basis for determining those findings. Gender and ethnicity are not prerequisites to serve on a board of directors. While it may seem obvious, it is worthwhile to check your eligibility to serve as a director against any prescribed statutory requirements.
- Time – Do you have enough time and energy to serve as a director? Check how often the board meets, and if you may be required to take on more responsibilities such as joining a sub-committee or working party. Reading board papers is no longer enough. You must be prepared to study them in detail and follow up to clarify some of the information or carry out external research as part of your preparation. You must be prepared to handle board emergencies which come up at short notice, or there may be required intensive periods of full-time work and focus. Most board meetings are three to five hours for each meeting. Allow approximately three times (3X) that for preparation. The time commitment for directors in larger corporations typically amounts to 300 hours per year. For a not-for-profit or volunteer board, it may be less, but you may have ancillary duties such as fund-raising.
- Job related competencies – do you have what it takes to succeed? Organizations are looking for knowledge and deep-level experience (often at senior leadership level) in a range of technical disciplines. These might include but not be limited to:
- Strategic expertise – the ability to examine the strategy through constructive questioning;
- Financial acumen – the ability to read and comprehend the company’s financial statements and to ask probing questions;
- Market awareness – the ability to recognize warning signs that might indicate a change in the overall health of the organization;
- Understanding the legal, compliance and regulatory framework in which the organization operates. The board may have oversight responsibility in a number of compliance areas. You should also understand your legal duties and responsibilities as an individual director
- Managing risk – experience in managing areas of major risk to the organization
- Industry knowledge and experience in similar organisations or industries. For example, in a financial organization, you may need to have a strong understanding of capital markets and financial products generally.
- Personal Skills – There is a vast array of ‘soft’ skills that can contribute to the effectiveness of an individual director. The foundation for these skills is grounded, in my view, in emotional intelligence (EQ). Undertake an honest self-inventory of your strengths and weaknesses and what you can bring to the table, ideally by conducting an EQ-I self-assessment. What can you do to be that competent director who is an effective and persuasive communicator, able to make a concise objective and clear contribution; someone who is socially competent and independent of mind without prejudicing loyalty to colleagues? Are you a good listener who can focus on key issues and respond with sound advice, balancing the interests of stakeholders, often with competing interests? Are you able to leverage your expertise and knowledge and express your ideas and views in a confident and assertive manner? Do you have a curious, enquiring mind and have the courage to probe and ask difficult questions, even as an outlier? (Shrinking violets need not apply). Are you an adept leader able to inspire and motivate people, and lead them through change and innovation?
You may not possess all these skills yourself, but it is useful to identify your strengths and if there are any essential skills that you need and ensure the board as a collective has the necessary skills to work well together and to challenge management in a collaborative way. If you have identified areas of personal development, you should take steps to study them for yourself or attend a course, or you could negotiate coaching or training as part of your induction.
Thank of joining a board not as an end in itself, but as an opportunity for growth and learning. The Governance Boutique, experts in getting you board ready, helping you to identify areas where you can be an effective contributor, areas for development and to develop the necessary mindset to become a valued and high performing board member.