Being A Director Is Not Just About Attending Board Meetings

By Paul Dubal, Governance Coach

The days of turning up for a board meeting, socialising with your golf buddies as you nod your head in agreement with all of management’s proposals, enjoying a sumptuous lunch, collecting your Director’s fee, and sitting back until the next quarter are well and truly gone.

The demands on the modern director encompass wide and diverse perspectives, and require a degree of knowledge, expertise and behaviours that would be unrecognisable from the expectations of even ten years ago. Merely attending board meetings is a baseline that is wholly inadequate for the modern director. Shareholders and courts are not sympathetic to directors both executive and non-executive, who fail to have the requisite knowledge of their companies and the wider environment in which it operates.

As a non-executive director (NED), you should have access to the same sources of information as the chair and executive directors, and these sources encompass so much more than the board papers. Your knowledge and awareness of the company can be obtained from a wide range of sources, and it is incumbent on you to be proactive in this regard. Here are five (5) examples of sources that go beyond the board papers (non-exhaustive):

1. The company website – this is its public face.  What does it say about the brand and culture of the organization, its products and services, its purpose, mission, and strategy? What are the values that drive the organization and how does it define success?
2. The financial health of the company. What do the financial statements show, and what are the trends? The notes to the financials can be particularly useful as it gives context to the results. Areas such as liquidity, cash flow, profit and loss, assets, and liabilities, all measured against industry standards and against the previous year are useful indicators of the financial direction of the organization.
3. Research the company online and via social media. This can be a significant issue particularly regarding reputation because trust and reputation that have taken decades to build can be destroyed in minutes and hours in one viral incident (just ask United Airlines)! Check Google, YouTube, TV, radio, and news reports as well as the key social media platforms (Twitter, Instagram, LinkedIn), talk to peers and network at conferences and industry events. 
4. Understanding, (through analyzing the board papers and discussing with peers and senior management) the internal activities of the company, such as proposals for mergers and acquisitions, litigation activities, incidents of internal fraud, special projects, research and development for new products and services, business continuity planning, environmental approach and the ESG strategy can all help to shape the questions you ask at the board meeting.
5. Understanding the risks and opportunities for the company and how these are managed, for example understanding the company’s risk appetite and risk tolerance through critically analysing the key risk indicators and asking the right questions of management, as well as reviewing the risk register and gaining comfort that the organization is properly scanning the horizon for new and emerging risks.

The above is just a sample of sources. Widening your perspective and proactively seeking diverse sources of information about the company will give you a much more informed view of the company, its challenges both internally and externally and help you to ask the probing, challenging questions that can guide the board to making the right decisions. From a personal standpoint, the learning you achieve will build your confidence as an influential and impactful director.

The Governance Boutique, experts in getting you board ready, can help you to create that impact by guiding you on sources of information and how to structure that knowledge in a way that enables you to build a library of information that supports the wide, informed perspective required of the modern director. We can help you leverage your expertise and contribution by asking the right questions at the right time and in the right way. Information is power, and its proper use is good governance.