Due diligence when joining a board

Due diligence when joining a board is a crucial step. Before you commit to a directorship, you should do your homework. It's a great thing to join a board. If you've been offered a role like non-executive director, congratulations. However, before you commit to the position, you should carry out your due diligence. Here is a 14-point action plan you can use to carry out proper due diligence. Joining a company’s board of directors will require a lot of time and effort, so you should be confident that your decision is the right one. An in-depth due diligence process not only provides security but also helps you prepare more quickly for the role. You will also learn whether your expectations match those of the board, and then you can move forward with confidence. Due diligence when joining a board: the essentials Due diligence – a 14-point action plan 1. Try to learn as much as possible about the company. Take the time to understand the business model, the market it operates in, its people, the challenges it may face, and the opportunities on the horizon. 2. It would help if you did more research than a quick look around the company’s website. Ask to read the company’s annual report, any analyst reports as well as recent media coverage. What about the company’s social media accounts? What do they say about the company? 3. Take an in-depth look at the sector, competitors, and market: issues, trends, macro factors, and potential disruptions. Does the company face any apparent risks? 4. Learn as much as you can about the company’s culture. How are employees and former employees describing the company on sites like Glassdoor? It is vital to get a sense of the company’s culture, style, and tone. 5. If you are considering an offer, ask to meet with third-party advisors like accountants, brokers, bankers, and lawyers. Ask them honest questions about the company’s CEO, the board’s chair, its place in the market and its strategy 6. You should pay particular attention to the quality of the chair, as she/he will run the board and determine its composition, overall style and culture, and setting the agenda. Your respect for the chair is essential. The CEO’s relationship with the board’s chair is equally important because it will affect its dynamics and function. It would be best if you found out what this relationship is like. 7. Look closely at the other people on the board. Learn as much about them as you can and, if possible, about the dynamics of the board. Board members whose roles are most rewarding make wise choices, experience a good fit culturally, and strive to add value. Do these type of people sit on the board you are about to join? 8. Burn some shoe leather, go for coffees, and get to know the board, both executives and non-executives. Examine the central relationships, styles, and values. Ensure the cultural fit is appropriate and that you believe your voice will be heard. 9. You should be clear as to why the board is considering you and how you would augment the existing board. Having no apparent role will cause you to lose confidence. Determine where you can provide unique value and impact. 10. A business is always more complex than it appears on the surface. Make an effort to speak with some of the company’s customers or key clients. Or, for example, is it possible to examine the customer service by ordering something from the company? 11. Be sure to get the board’s dates for the next two years to have no scheduling conflicts. Take this step before committing to anything. 12. Make contact with as many people as you can, including former employees and those who have worked in the HR department. 13. It’s also vital to ask yourself, “Will I enjoy myself on this board?” Being on a board is a serious commitment, but it shouldn’t create hardship. An influential board member is a happy and productive board member. 14. It is okay to decline an opportunity if you are unsure about its culture or board.

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Diploma in Corporate Governance

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Certified ESG Professional

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Company Secretary

Overview of Corporate Governance

AI Governance

CSRD Reporting

Go Further With Membership

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Due diligence when joining a board

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