What qualifications should a board member have?
What qualifications do you need to become a board member? There are many answers to this question but the qualities of a potential board member often outweigh formal qualifications.
Board member training is essential to know how boards work. You don’t want to walk into a boardroom on your first day and feel lost. Knowing how boards work and your duties as a director are crucial.
Leadership, governance and oversight
An organisation’s board of directors provides mission-based leadership and strategic governance so a qualification in corporate governance will give you the foundations to be an effective director.
Although day-to-day operations are overseen by the chief executive officer (CEO) and staff of a company, the relationship between the board, the CEO, and the staff is a partnership, so the board’s involvement is critical.
A high-performing organisation also values diversity on its board of directors.
To identify ways in which the board could improve its effectiveness in achieving the goals and mission of the organisation, its composition should be evaluated annually in terms of cultural background, race, age, religion, professional and personal skills, life experience, and contributions.
Specific board member responsibilities include:
- Assisting the CEO in implementing the strategic plan.
- Assessing impact, performance, and effectiveness by reviewing outcomes and metrics.
- Assessing the CEO and board’s work annually.
- Preparation of agendas and supporting materials for board and committee meetings.
- Meeting all legal and fiduciary obligations, including approving the annual budget, audit reports, and material business decisions.
- Supporting the CEO, the chair of the board, and the nominating committee in identifying and recruiting new board members.
- Assisting the CEO and board members in the implementation of Board resolutions and achieving the strategic goals.
- Taking on special assignments and serving on standing and ad hoc committees.
- Assisting stakeholders; acting as the organisation’s ambassador.
- Assuring that the organisation’s board and executive are diverse enough to reflect its target community.
Board members should always have:
- A formal qualification in corporate governance
- Experience, passion and the right mindset
Board members should seriously consider:
- A qualification in ESG
- A qualification in HR
- A qualification in cyber security
A qualification in corporate governance
Boards of directors have a pivotal role in shaping a company’s success. Despite this, less than 0.5% of directors worldwide have any formal, relevant qualification.
This may not have been a problem years ago when boards regularly found themselves in more of a back seat role. Now, it is crucial, especially for first-time board members.
Qualifications in corporate governance give you genuine insights into the unique boardroom environment. You’ll learn how boards work, what colleagues expect from you, and how you can combine your own experience with the workings of a board to achieve success.
Beyond a qualification in corporate governance, the next step depends on you and your organisation.
What industry are you working in? What are your fellow directors qualified for? What backgrounds? These questions will guide your qualifications and prepare you as a unique addition to your company’s board.
A qualification in ESG
Environmental, social and governance (ESG) represent corporate efforts to be part of a fair, sustainable world. ESG projects have grown to command over $40 trillion in global investment by 2022, which speaks volumes about the importance of the topic for companies.
Investors, consumers and lawmakers care a great deal about ESG goals. They align with personal values, and research shows they create more substantial long-term success for companies.
But the topic is complex. Each of the three letters represents endless streams of data and opinions that can be hard for newcomers to grasp. A qualification will help enormously with this.
A qualification in cyber security
Undoubtedly, the world is moving toward a digital mode of business. The pandemic and continued improvements in technology have only fuelled this transition.
But as the world moves online, criminals follow, and cybercrime is estimated to cost the global economy over $10 trillion annually by 2025.
As a board member, you must know how your business can prepare itself for cyber attacks. It is not good to tell investors or auditors that your staff is ‘handling it’ or that you’re unclear on the metrics involved. You need to be central in defending a company against cyber threats.
A qualification in HR
Increasingly, management and investors are looking to the board for guidance on retaining top talent and creating a positive working environment.
Recent research in the United States suggests this is more important than ever, as corporate leaders face “an avalanche of workplace issues with no easy answers.”
Because of this, your appeal to a board may be enhanced if you arrive pre-qualified in HR.
The non-formal qualifications
Director training is essential, but it’s crucial to remember that they’re not the only qualification needed to become a board member.
Also key to the role are the qualifications that only experience can grant. If you’re thinking of taking on a board position, ask yourself if the following apply to you:
- Do you have the right experience in your industry? Do you know everything about it? Are you familiar with the challenges and how to solve them?
- Are you passionate about the work you do? Will you look forward to board meetings and see them as a chance to benefit your company?
- Are you a good communicator? Do you have a track record in mediating disputes and forming extensive networks?
- Are you skilled in developing strategy?
You should answer ‘yes’ to most, if not all, of these questions. They are essential to good directors.
What defines a qualified board member? Three things:
- Natural capability, fuelled by experience and leadership ability
- Formal qualifications in one or more core governance topics like ESG or cybersecurity
- A formal qualification in corporate governance