Feature: Breaking the ice

Directors can often intervene too early or take too long to make a contribution when first joining a board. Charles Beelaerts provides some tips on how to make a good first impression and get off on the right foot.

Breaking the ice

Tips on joining a board

• Do a thorough due diligence before you join
• Insist on a good induction program
• Spend time with directors, the chair and senior management to better understand the business and its culture
• Be yourself from day one
• Listen and ask questions to begin with
• Add value in your area of expertise as quickly as possible
• Don’t take too long to raise issues that concern you
• Get regular feedback from the chair on how you can add value

While experts may differ in the specific advice they have for directors joining a board, they all agree a good induction program is critical.

Geoff De Lacy FAICD, who has worked on or consulted to hundreds of boards, and who is the author of How to Design and Implement a Board Induction Program (AICD, 2004), says: “The area of orientation and induction per se is the worst-handled part of the corporate governance process and it is just so important it’s not funny.”

Similarly, Wendy McCarthy AO MAICD, who has been a director for 40 years, says: “You should acclimatise by being briefed by the CEO before you come to the board so that you know something about the business from a management perspective, and you already would have had a discussion with the chair.”

She adds that after the first three months, there should be further discussions with the chair and other new directors because many directors do not take everything in the first time.

Elizabeth Jameson FAICD, a director, founder and owner of governance consultants Board Matters and a non-executive director and chair of a range of companies, says acclimatising is exactly the right word to use because “the biggest initial hurdle for a new director is getting to understand the board’s culture and then fitting into it and even helping to shape it, hopefully always for the better”.

Jameson adds that a new director should aim to bring to a board three most important attributes. Firstly, an ability to synthesise a huge amount of information down to meaningful and useful “bytes”. Secondly, an ability to participate in the sometimes glacially slow but, when properly done, rigorous and satisfying process of true collective decision-making, and lastly, lashings of emotional intelligence. This means taking the time to talk to the chair, first and foremost, outside the formal meeting setting “several times in your first year, to get a sense of the way you can become a real participant in that process over time”.

Mark Coleman FAICD, a company director and AICD course facilitator, says: “A new director should also talk to anybody else who has knowledge of the culture and style of the board because culture and style are what it is about.”

Alison Gaines FAICD, chairman of the College of Law Western Australia, executive director and CEO of the Law Society of Western Australia and the recently retired Deputy Chancellor of Murdoch University, believes that among the many things to be reviewed before joining a board are the reputation of the directors and the CEO, the competence in terms of the organisational strategy and prevalence of conflicts of interest among directors and executive directors.

Gaines adds that it is most important to sign a confidentiality agreement before joining and to “get access to briefings and strategy documents to ensure you are getting on to the right board for you”.

Coleman’s advice to new directors is: “The board you are about to join wants you to be successful in your role so bear that in mind. It’s about them helping you and you helping them so go in with a positive frame of mind. And, also stick to your acknowledged areas of experience and expertise early on. The worst thing you can do is come across like a ‘smart alec’.”

Common Mistakes

There are several mistakes new directors may make and traps they may fall into when joining a board.

According to McCarthy, one mistake is that they do not listen. A corollary to this is that they intervene in conversation too early.

“Many of them assume their importance is so great that people want to hear their pearls of wisdom, whereas it is probably better to listen carefully before intervening,” says McCarthy.

However, she would never want to “muzzle anyone who has a fresh question and a fresh approach because one of the things new directors do is ask the unaskable questions, which is what all good directors should be doing, but sometimes they get a bit sloppy and cozy in their comfort zones”.

At the other end of the spectrum, De Lacy describes a situation that comes about because of a poor induction process. Because directors aren’t always given a proper background of the organisation or the infrastructure, he says many sit back while they find their feet instead of using the core skills and experience that got them the directorship in the first place. They are there to plug a hole, which will remain unplugged for as long as it takes for them to feel comfortable enough to speak out.

Being Active and Vocal

The consensus is that new directors should listen and ask questions to begin with. Coleman, for example, says: “When you join a board you are joining a narrative part way through. Some issues will be going back months, so it’s probably a good idea to take stock and listen more than just engage. The worst thing you can do is jump in early without regard to the style and culture.”

Gaines agrees that in some ways. new directors need to have a degree of reticence because they do not know everything about the enterprise at the start. “But where you have been taken on to add value in a certain area you should try and add value very quickly,” she says.

Stephen Gerlach MAICD, chairman of Santos and Elders, encourages new directors to make contributions as quickly as possible.

He says there is no such thing as a period during which new directors just sit and listen. “It will depend on their understanding of the business and their own personalities, but one way or another they have views and their new colleagues want to hear what these are.”

Jameson believes new directors have to be themselves from day one, but says it is preferable to take time to get to know the company, its business and the board culture before they express opinions extensively on board issues.

Lessons Learned

With the benefit of hindsight, John Harte FAICD, a professional company director who does much boardroom facilitation, training and development, says he would have spent more time understanding the organisation and on understanding the board as a group and as individuals, and he would have spent more time building relationships.

“In some cases, there was a total lack of an induction program, which really reduced my effectiveness and ability to make a worthwhile contribution early in my tenure,” says Harte.

The first board McCarthy joined went into administration before she was officially appointed. Looking back, she says she should have done better due diligence. On a couple of occasions, she took too long to raise issues that concerned her. “Sometimes, there are no second chances,” she says.

Like McCarthy, Gaines encountered a situation where she would not have joined a board if she had reviewed a few sets of minutes and looked at the profiles of directors during her due diligence. Conflicts of interest between directors would have been apparent. As it turned out, she resigned after two meetings.

De Lacy observes that sometimes it is necessary for a new director to do a lot of personal research to make a contribution. He would have definitely done this with one board he joined if he had his time over again. Regarding another board, he should have looked more closely at what the organisation physically did, he says.

Jameson’s final piece of advice is not to join too many boards. “The sheer business of acclimatising and fitting in, let alone the work of the board itself, means you need to manage a significant workload and put in much intellectual effort if you are doing your job correctly,” she says.