Doing your due diligence: Beyond the financials
Two years ago, I was fortunate enough to be nominated for a position on a national board of a prestigious, internationally recognised Australian organisation. It was my first board position and directorship and I was immensely pleased to be starting in such a way.
Naturally, I did the recommended due diligence: director’s indemnity insurance, financials of the organisation, calibre of the other board members, all of which seemed perfectly satisfactory.
Learning the hard way that financials aren’t the only important factor
However, after two years, I have just resigned, finding it is not a board that I feel comfortable being on. Problems included extensive in-fighting and division between several of the directors, as well as an antagonistic relationship between the senior executive and the board, with all attempted direction by the board met by the CEO with derision and frustration.
There had been a long history of the board being simply advisory and essentially just accepting and listening to what management was doing. However, circumstances had changed dramatically, and a firmer course of direction was needed. The management team, and particularly the CEO, simply could not adjust.
As a national board, with members located all around the country, they were also surprising old school about face-to-face meetings, rather than approaching things more sustainably and working more with hybrid or virtual meetings.
Finally, the meetings themselves were very long-winded and inefficient, taking up most of a day to get through agenda items that could easily be resolved in other ways.
So how do you go beyond the obvious and find out what sort of board environment you are potentially entering?
A deeper dive to assess your potential board appointment
My recommendations after my experience cover several key areas.
As well as the standard annual reports, ask if you can have access to at least a year’s worth of minutes and analyse these thoroughly. This should allow you to determine how these meetings run and what items are covered over an annual cycle. The important points to note are then the resolutions being made and the ongoing action list. This will provide insight into who is making the decisions (management versus board), who is acting on these and who is driving their closure.
As well as reviewing your fellow board members on standard platforms such as LinkedIn, if possible, reach out to them and see if you can make a time to discuss the board procedures and functionality. By speaking to members other than the chair (who may be more reserved), these directors can provide valuable insight into how the board functions and how satisfied they are with the board workings.
It’s also a good idea to ask them about the time commitments – these can be quite generic in board advertisements but an existing director will have better insight into the nature of meetings, the number of ad hoc meetings that occur outside of the schedule and the expectations of the management and other directors in terms of participation and contributions, such as sub-committee roles, strategy planning sessions and board and management workshops that may occur outside of the standard board program.
A review of the meeting minutes and discussion with existing board members can also provide insight into the function of the board and the role of the directors. It may be a position where the intention is to maintain the status quo and provide guidance, or maybe change management is needed and the organisation is going through a transition.
Keep your own goals in mind
Does this opportunity match your skill set and your own objectives? Are you wanting a position where you can really contribute and make a difference, or are you looking to just learn the skills and not rock the boat? Be very sure of what it is you are expecting from the position and that you have the temperament and skills to achieve what is needed. Even in my short time as a director so far, I had the sense that others were in the role to make a name for themselves and aggressively pursue their own agendas, rather than consider the needs and operating environment of the organisation they were working with.
Finally, be as objective as possible when deciding whether to go ahead with the position. Whilst the board position may look good on your CV and seem a flattering offer, if the organisation does not align with your values, or provide for your expectations, you may feel continually compromised or undervalued.