Five tips for new directors

Read the board papers, know the company’s business, do your due diligence and stay out of the weeds are some of the tips experienced board members have for those just starting their director career.

First-time directors face a number of challenges in their early days around the boardroom table, according to two accomplished board directors.

“There is nothing worse than coming to a meeting and management has taken the time and respect to prepare proper board papers to make sound decisions…then you get there and someone hasn’t read them and they’re asking questions that are clearly already in the materials. So have respect for management and come prepared and read the papers. You get found out pretty quickly.”

That’s the advice of HLB Mann Judd corporate advisory partner Katelyn Adams for board directors starting out. 

1. Be prepared

As a newly minted board director at a South Australian aquaculture company, Adams admits she underestimated the steep learning curve of her first board role.  

“I knew about business, I knew about ASX listing rules and good corporate governance, but you also need an understanding of that particular business.”

Now, as a company secretary on multiple ASX-listed company boards, Adams firmly believes preparation is paramount for board directors early in their board careers. For her, it involved numerous site visits and immersing herself in the aquaculture business to understand the fundamentals.

“I made a point of going and doing those site visits and getting to know management, because they usually take you around the site,” she says. “Get to know the numbers. You can’t be a director on the board and not have a duty of understanding the numbers. It’s really important, even if you don’t have a finance background.”

She recommends directors learn the ropes at a community, not-for-profit or sporting club board before making the leap to listed company boards. 

Angie Paskevicius FAICD, experienced CEO, executive coach, board chair and winner of the AICD WA 2024 Director Award for Excellence in the Not-for-Profit Sector, says the induction and onboarding process for new board directors is critical to understanding business operations, strategy, finances, stakeholders and culture. 

2. Ensure your values align

Paskevicius, whose board career spans more than 20 years and features numerous roles as chair and NED in the NFP and government sectors, advises new directors to be clear about their unique value propositions.  

“Know what your passion and values are,” she says. “I knew, even though I worked in government when I joined my first board, that the NFP sector interested me.

“In the same way, with government, what also attracted me to organisations was the requirement for change and business growth and transformation. People often don’t get real satisfaction from their role as a director unless they’re passionate about the organisation and what they are hoping to achieve.”

3. Do your due diligence

Due diligence is a must for new directors. Paskevicius says it’s about understanding who the chair, CEO and executive leadership team are, as well as other board members.

“It’s not until you get there that you really know what the board’s like. Every board is different and every new board member who joins the board changes the dynamics in the boardroom.”

Adams has a similar take on due diligence.

“It’s really important to do due diligence before you take an appointment to understand who you will be sitting with, the background of the business,” she says.

“Is it something that fits with you ethically or fundamentally? That might be a privileged position when looking for a board appointment, but when you are beholden to shareholders, it’s really important you can align and get along with the people, make effective decisions and know why you’re there.”

4. Listen, then ask

Both Paskevicius and Adams believe active listening is an important attribute for newcomers to the boardroom. Paskevicius ranks kistening along with core attributes of critical thinking and judgement. 

“Understand what’s going on around the table. Seek first to understand and listen. Unless you understand what’s going on in the business, there’s not a lot of value you can offer.”

Adams says it often comes down to communication skills. 

“You need to be able to communicate with management, your general employee base and other board members, but it’s also really critical to be able to listen because you see big personalities at board level. If you can’t listen and then communicate, a disconnect can form pretty quickly.”

5. Keep out of the weeds

Paskevicius believes one area where inexperienced board directors can struggle is getting into operational detail in board meetings. 

This, she says, runs counter to the role of the board director, which is to provide strategic oversight and stewardship. This is the “noses in, fingers out” concept that is so important to remember.

Directors who regularly delve into the operational side of the business also risk eroding trust with the CEO and the executive.