Are You A Good Board Member?
Prestige, status, experience and perks makes being a director sound great, but any board member will tell you that there is a LOT more to it, and such benefits are not what the job is about. It may seem controversial to refer to being a director as a job, but in fact, that’s what it is. It is the job of board members to steer their organisation onto a prosperous and sustainable path.
So how do you know if you are a good board member, and what essential questions should you be asking yourself and taking to the board?
1) Do you know your stuff?
If someone were to ask you whether you knew your duties and responsibilities, can you answer them clearly and succinctly? Knowing what is expected of you and what value you bring to the table is essential. Board members having a solid understanding of their duties and responsibilities helps to hold themselves and the organisation accountable when advancing its purpose.
The purpose of the board is key. It is a guiding principle that should always be at the forefront of board members’ minds. Do you know your purpose and that of the board? The purpose helps to provide a lens, making sure that all activities and projects that a board partakes in are aligned correctly.
Part of knowing your stuff means knowing the basics. Board members today are expected to have practical knowledge of finance, law, regulations and how they affect the organisation and its environment. Many board members get brought on because they have great networks and are influential. Whilst these qualities can be a strength, it is important that such members also have basic practical knowledge so that the board can work effectively.
Knowing your stuff also entails that board members and the board as a collective is reviewed often. Feedback allows a board member to learn and improve. Aspects that can be reviewed include use of time, use of skills, knowledge of the company and industry, access to information, understanding of strategy and levels of candour and preparation. Most importantly, the impact and real outcome of the board’s activities and projects should be assessed.
Questions you should be able to answer include:
Do we do good work? If so, how do we know?
Are our plans focused on outcomes and real, deliverable results? (As opposed to undertaking projects for the sake of it, or because of process and tradition).
2) Are you a team player?
Having individual value and expertise is great, but that’s of no use if you cannot work together. Board members don’t operate in a vacuum, their duties and responsibilities are all interrelated. This means that the makeup and culture of the board is important. Ideally, within the board there should be a culture of mutual respect between members. A good foundation of respect means that questioning ideas and playing devil’s advocate is encouraged. This fosters a culture of debate which leads to better decisions getting made.
From this mutual respect comes trust. Board members that trust each other are comfortable with sharing difficult information and are more able to be transparent and frank. Questions boards should ask themselves include:
Is our structure fit for the purpose in today’s changing world?
Are our decisions thought out and considered carefully? Were different perspectives considered?
3) Why are you doing this?
Board members should be passionate about the work they do. Members who are passionate and engaged about the purpose boost the enthusiasm and passion of other board members. Board service can be demanding. There’s a lot of duties and long meetings involved. There are times where consensus or decision-making seems impossible. Board members who are passionate about their role will stay motivated throughout these ups and downs and be able to see why their job is worth it. A passionate, engaged board member will also always have the company’s best interests at the forefront of their mind. They understand that the job doesn’t finish at the end of a meeting and are constantly on the lookout for opportunities to advance the organisation. Passionate board members who have a good understanding of their duties and purpose should be able to answer the following:
Why does this board exist?
If this organisation didn’t exist, would I create it? Why? In what form?
4) Do you ask a lot of questions?
Good board members should question everything. In order to make progress and improve the organisation, the hard questions need to be asked. Posing challenges to the status quo can help the board and the executive team figure out what to do before the organisation hits potential problems down the track. But to be able to ask the hard questions, board members need timely access to information and people that can answer their questions. Therefore, it is important that these procedures are in play. Good questions that can be asked include:
Can our strategies address potential future problems?
Why do we do this process this way? Is there a better way? A more cost-effective way?
Why are we using our financial and human resources in this way? Are there better alternatives that better align to our purpose and strategy?
There is no one correct formula to determine a good board member. However, having board members who know their stuff, are team players, are passionate, present and ask questions is always beneficial. Good board members translate into a good board – a board willing and able to fulfil their purpose and steer their organisation onto a prosperous and sustainable path.
As part of being an investor opportunities arise to also be a board member and bring your skills to the table. Many private investors enjoy this higher level of engagement with some of their portfolio of entities.