Working in the board space for over 25 years, I receive a number of calls and emails each month asking if I can help someone get on a board or obtain another board seat. The truth is, if I knew exactly how to ensure someone could get a board seat invite, I’d happily share the magic sauce. Sure, we know that existing relationships and networking are important, but the strange thing is … you actually can seem too eager. Serving on nonprofit boards can showcase your board skills to fellow board members who sit on for-profit boards—and many have successfully taken this route—but that’s not exactly a foolproof formula either.
All that being said, what I am qualified to share is what commitments board members should be making prior to taking a board seat, which in today’s era is a very valuable piece of real estate. Just ask your friendly institutional investor, and they will be quick to remind you how strongly they feel about having the right people in the boardroom. What I’m proposing are three commitments, or maybe even an oath, that directors should take prior to joining a board—and shouldn’t forget as their board and business lives get busy and more complex. This new board oath will resemble the oath taken by the Boy and Girl Scouts. Even if you weren’t in Scouts, I’m sure you’ll recognize it: “Be Prepared” … and be ready, willing and able to do what is necessary in any situation that comes along.
Here is my new “Board Oath,” which I believe all board members should take and remember in their quest to be an effective corporate director:
1.“Be Prepared” to devote the time and energy to being a director. Seems simple, right? You’ve accepted an invitation to join the board, you’re being fairly compensated for the opportunity, and you have a fiduciary responsibility to the shareholders and the company to perform your duties. All that should translate into you planning to give the time necessary to be an effective director. That means don’t plan a flight that requires you to cut a board meeting short or leave a committee meeting early and miss an important discussion. Or worse yet, put a board in the position where it doesn’t have a quorum to conduct business. An investor will tell you, point blank, that if you don’t have the time to serve the company properly, don’t accept the board invitation. That includes directors who develop the habit of calling in for a board or committee meeting (versus showing up in person) as a regular occurrence. And it becomes an even bigger challenge for younger directors who have less-flexible job schedules and young families still at home needing their due attention. These factors still must be taken into account when considering a board invitation.
2.“Be Prepared” for board and committee meetings. Again, this sounds simple, but it is typically easy to tell who has done their homework and who keeps asking questions that were answered in the board materials. If your management team is asking the board for its perspective on buying the company’s stock back and you don’t know the ramifications or questions to ask, then it’s your duty to educate yourself between meetings. If you are a new director and still learning your way, don’t disrupt or commandeer the board or committee meeting just to educate yourself on something basic the rest of the board already knows. Meet with management or the corporate secretary outside of official meetings to learn the business or ask fundamental questions. Nothing will irritate your fellow directors more than taking up valuable board agenda time on questions and issues that you could take time to learn off-site. That doesn’t mean you should be shy about asking questions, but know the difference between relevant questions to the discussion at hand and something foundational to a director’s job on which you should get yourself up to speed.
3.“Be Prepared” to have your performance and contribution evaluated. Yes, you heard me right. This is an important part of our new board oath. We want boards to be collegial, but more importantly, we want boards to be effective—and investors and good board leaders want this, too. Sometimes I’m taken aback by board members who push back on this evaluation concept. We all got evaluated in our day jobs, so isn’t it such a bizarre concept to think that we shouldn’t get reviewed as a board member? Effective directors don’t think twice about this exercise, but directors who fall short on #1 and #2 of our new oath have reason for concern. I’m personally a fan of peer-to-peer reviews, since I believe it is the only evaluation method that will actually change behavior. PwC’s 2018 Annual Corporate Directors Survey reflected that 45% of board members said there was a director on their board who should be replaced. Investors don’t want to see this statistic continue to rise, and they now are pushing for clearer proxy disclosure on how boards evaluate their performance.
Those who know me are aware that I feel the pendulum between investor expectations and board performance has swung too far in many areas. Yet, the above commitments are simply fundamental—they’re basic board member expectations. However, ignorance or abuse of these commitments still exists on boards and with more than a handful of directors. I’m not really asking for directors to take an oath; it doesn’t make much sense. But I am advocating a baseline for some of the non-legal covenants that should be understood and committed to before someone signs up to take a board seat, if for no other reason than to respect the company and shareholders they represent.
TK Kerstetter is the CEO of Boardroom Resources/Diligent and is a second generation pioneer of governance thought leadership and board education. He can be reached at email@example.com.