The debut of a new director of a listed company is not for the faint of heart. Even for experienced executives who have made dozens of risky decisions, the experience can be stressful. “Much of my career was spent as his CFO working at a large company,” says Mark Blaufus, director of publicly traded biotech company Bluebird. “When you become a board member, it's natural to feel like you should know a lot because you were hired to provide senior-level guidance. It's stressful enough.”
Like any actor appearing on stage for the first time, the hardest part is saying the first few lines. Some new board members hold back because they don't think it's their place to provide input yet. “If you just keep quiet the first year. [of board service]Celia Huber, senior partner at McKinsey & Company and leader of the management consultancy's North American board services practice, says, “You're “young and unsophisticated on your first board.'' It just becomes entrenched in the minds of the board of directors.” “It's important to speak up and ask about the issues, rather than dictating the answers. You're on the board for a reason, and you were chosen based on your experience and perspective. Still, I would like to be careful about the broadcast time.
Blaufuss offers similar guidance. “Definitely try to contribute, but take it slow,” he says. “It's best to first understand the dynamics between the board and management. Staying within your lane is also important. If your expertise is project engineering and your subject is high-tech investing, Let's have members who understand lead the discussion.”
He also comments on the need to balance the urge to engage in constructive dialogue with the respect needed to build trust with other board members. “It's not always easy to strike that balance when you have so many experienced and opinionated people in the same room,” he says. “Members have unique personalities, backgrounds, experiences, and ideas about how the company should and should not be run.”
Yet another piece of advice: “If you're asked a question you can't answer, back off because you simply don't know,” says Blaufus. It's better to do that than to act like you know what you're talking about. ”
Preparing the board 101
Today's new class of board members has different expectations than the board members of a generation ago. This is evidenced by the tremendous amount of due diligence prospective directors are currently submitting to find their perfect public company board fit. “Boards have high expectations of new members, and vice versa,” says Kathryn Kaminski, vice chair and co-leader of trust solutions at audit and advisory firm PwC.
Here's what today's director candidates believe is important in providing board service.
• First and foremost, director candidates want to be sure that their skill set can meet their specific needs and add knowledge, experience, and new perspectives that are currently lacking.
• They also want to learn from the diverse expertise and capabilities of current board members.
• It is most important that a company has a mission and culture that aligns with your personal beliefs.
• They expect absolute transparency about the organization's financial stability, especially when current conditions are tough. The same applies to board oversight of past legal issues.
• The personalities of the board members figure prominently in the analysis. Incumbent members in particular tend to consume all the air in the room, create arguments, and don't seem to fully understand the vision or strategy.
• They are particularly interested in the company's proactive approach to the principles of diversity, equity and inclusion.
• They perform extensive due diligence and read almost everything they can find about a company, so they ask about past scandals that have been made public or, for example, why a former director appears to have left on a cloud.
• Once you have narrowed down your expectations, look to meet in person with the entire board, preferably one at a time or in small groups.
• Finally, ask someone on your board to serve as a mentor. This is the person you can rely on to help you prepare for your first board meeting and guide you through your first year on the job.
