Five valuable tips for first-time board members
Are you a first-time board member? The number of new directors serving on boards in Ireland, the U.K., and worldwide is rising as the importance of boards becomes more apparent to organisations of all sizes. The proportion of first-time board members appointed to the U.K.’s biggest companies, for example, is the highest since 2015.
The private equity sector has been hiring directors in droves to diversify their boards, gain new talent, or prepare their companies for IPO. Many of these recruits are first-time board members.
A board member is one thing, but a great director is another.
Great directors can have a tremendous impact on a company’s performance.
Becoming a successful director requires a certain mindset, commitment, and curiosity.
Watch David W Duffy, CEO of the Corporate Institute, explain what makes a great board director and first time board member.
Directors themselves admit there is always room for improvement.
According to a 2020 survey in the U.S., 49% of directors at publicly held companies thought that at least one fellow director needed to be replaced.
Here are five ways first-time and seasoned directors can succeed and thrive in board meetings.
Companies prepare a package of materials for directors before each board meeting. These board papers typically include financial statements, notes on company strategy, H.R. decisions, cyber security, ESG and other essential issues.
Many directors fail to read the board papers even though it is the least they can do.
However, just reading the board papers isn’t enough. The best directors will seek guidance from other experts who can fill them in on important aspects of areas they are unfamiliar with.
“The best board members are well-versed and don’t need to be educated at the expense of other people’s time,” says Duffy. “Fail to prepare, prepare to fail.”
Don’t try to run the company
The biggest obstacle to new directors doing an excellent job is forgetting their role. “You’re a director. You aren’t the executive management team,” says Duffy. “Directors advise CEOs. They ask good questions; they don’t dictate strategy.”
Ask intelligent questions in the right tone
Directors must ensure that the organisation follows its strategy while maintaining its purpose and values.
New directors need to ask open-ended questions so that executives and directors can share ideas. “Great directors know when their speaking will add value and when it will be a distraction,” says Duffy. “It is crucial that the tone of the question matches the content.”
Nurture relationships with other board members
The board chair will typically walk new directors through the basics of how the company works and gives them an overview of its various intricacies.
The best directors will go well beyond these steps and get to know the other board members. A new director’s ability to network with another director or directors at other firms will enhance everyone’s knowledge and skills.
Join a board committee
An excellent way to gain a deeper understanding of the organisation and the board is to join a board committee, such as the audit or ESG committee. Taking part in a committee makes new directors more accountable by giving them specific responsibilities.