Joining a Board
If you are looking at joining a board there are a number of factors to take into consideration. These form part of the due diligence one should perform before one considers joining a particular board.
As one is likely to be taking on the responsibilities of the board, for the past as well as present and future strategies and decisions, it behoves one to pay particular attention to the board’s structure and operating basis.
Some questions one can ask include:
Is this an active board focusing on performing it’s fiduciary and compliance requirements or does it take a passive, wait and see approach?
Does the board have a mission statement and goal(s) for the company and are these in alignment with ones own?
Is there well thought out strategic planning for the company direction to achieve this mission statement and goals?
Does this include the risks, such as market shift for example, and the ability to execute the laid out strategy?
How do the board members relate to each other? Is there a compatible relationship and is it a relationship that one can integrate with?
How does the chairman run the board? Does he take a dictatorial or a consultative approach? Does he act as a mentor to the board members and is he willing to guide the board members on course as a captain would guide a ship? Is he truly a captain of industry?
How does the board obtain the information they need to make decisions? Are there committees that serve to provide this information? Are any of the board members on those committees? Would you be expected to serve on a committee, say an audit committee for example? Would that be a good fit for you?
Does the board meet with the customers or clients of the company to obtain information that is not ‘sanitized’?
What is the relationship of the board with management? Is it a cooperative relationship or are their strains?
Do discussions occur regularly and is there a good interface between the audit and other committees and the board?
What is the attitude of the board to shareholders? Is there a good and effective relationship between the board and the shareholders? Are the share holders happy with the board’s strategy and decisions?
How does the board handle conflicts between them and management and or shareholders?
Is there an orientation program or guidance to bring new board members up to speed or are they just thrown in to fend for themselves?
What steps have been taken to put in place a crises management program in the eventuality it will be needed?
Check over the financials. One should have access to the past five year’s financial balance sheet and cash flows. Have there been any difficulties? How much debt does the company carry and what provisions are in place to manage that debt. How does the board keep alert to financial risk and any red alerts that may arise?
How does the board handle legal matters? Are they abreast of any potential legal threats or litigation that can impact on the well being of the company? Are the directors Insured? This is most important. Also, if an impending legal issue arises, would the insurance company pay for legal fees for the director or directors up front?
Looking and answering the above will give one a good feeling for the board and if it is going to be a good fit.
Which leads us to the question of renummeration? Is the renummeration offered on par with the responsibilities that will be undertaken? What is included in the package? Is it clearly defined or rather vague?
What can you bring to the board?
It is important to understand what you are bringing to a board and that the board can see, understand and appreciate the skills, knowledge and experience you are bring to the table. Why should the board select you out of what may be dozens of potential candidates?
What contribution will you make to the board and the company as a whole?
The above questions asked and answered satisfactorily will give one a good insight and understanding of a board and how one would fit in and if indeed it is the right board for you and you are right for the board.
Part 4 Corporate Governance can be found at Corporate Governance – Part 4