Evaluating a Board Opportunity
Whether a board opportunity is something that you have actively applied for, or has presented itself to you via your network, a thorough evaluation of the board and organisation is something that I strongly recommend.
Contrary to popular belief, you don’t need to accept a board opportunity when it’s offered to you. Taking on the role of company director is a serious undertaking – with very serious, personal liability, responsibility, and accountability. This degree of significance is indicative of the level of due diligence and evaluation required before accepting the post of company director.
I recommend considering several key factors prior to accepting a board role, or even putting yourself forward for the position in the first place.
1. Do I have the time, not just for board meetings but for preparation, committee service, and other requirements that come with the role?
Unequal contribution amongst board members is the number one pet peeve shared by nearly all board members. Ensuring you have enough time that you can prioritise to the role is your first (and continual) responsibility. Only you can answer this question realistically and honestly.
2. Am I interested in this organisation, and do I care about what it’s wanting to achieve?
It’s hard to really get behind something if you don’t believe in it or don’t really care. It’s the same in the boardroom. And whilst some organisations may “just” be making widgets, your time on the board will be far more enjoyable and valuable if you can really champion widget making and want the organisation to achieve its highest widget-making ambitions.
3. Do I have the expertise they are seeking?
Whether responding to a board opportunity advertisement or accepting a personal invitation to join a board, run through a quick audit to see if you believe you have the expertise the board and organisation needs or wants.
Firstly, you don’t want to waste your time responding to an advertisement you’re not suited for, and secondly, you don’t want to be placed onto a board under the pretense of being someone’s proxy in the boardroom.
4. Is there a material conflict of interest between me and the organisation?
Whilst conflicts of interest are a fact of life, some conflicts are more substantial than others. The more substantial (i.e. the more material), the harder it is for you to be, and be seen as, exercising independent thought and decision-making in the boardroom. Even if you believe that you can and do exercise independent thought and actions in the boardroom, the organisation’s members/shareholders will likely be unhappy with your position, thus creating a political nightmare for you, the board, and the organisation. Stand back and let the board operate free of any conflict-of-interest issues.
5. Can I maintain my independence on the board (is there a conflict of interest between me and another board member/s)?
Whilst the “networking economy” is alive and well in boards across the world, over-played this creates situations where obligation and reciprocation can cause issues for boards and organisations (and their stakeholders). If someone is highly instrumental in securing you a seat on a board, you’re going to probably feel like you ‘owe them’ a favour. Unfortunately, it’s human nature (a throwback to when this sort of thing was important to survival, but not so much in the boardroom).
These favours may look like: supporting their opinions in the boardroom when you may not necessarily agree with them, sharing confidential information with them outside of the boardroom (if you’re on different boards), voting in line with them even though you disagree, and/or voting in more of their friends onto the board even when they don’t suit the board or organisation.
Saying ‘no’ to an invitation in this circumstance may be harder, but it may be a matter of ‘choose your hard’; saying no now, or possibly having to live with yourself acting out of alignment in the boardroom.
6. Has my due diligence turned up a significant issue that I’m not comfortable with?
Whether you’ve been asked to join a board or have received an offer through a formal recruitment process, any board evaluation involves comprehensive due diligence. Layered on top of this, it’s important to understand your own level of risk tolerance; the level and extent of risk you are willing to take on. You can be either conservative (i.e. you tend to be more risk averse) or more comfortable with taking on risk (i.e. you tend to be comfortable with taking risks). Although they carry slightly different meanings, the level of risk you are comfortable with is sometimes referred to as ‘risk appetite’ or ‘risk profile’.
Combining the information that you find through your due diligence with your risk tolerance level you will get a sense of your ‘comfort’ level of joining this board. Your due diligence may unearth an issue that you’re not comfortable with; that’s a good indication of where you may want to ask more questions. after receiving the answers to your questions, if it’s an issue that you remain uncomfortable with, it’s a sign to strongly reconsider this particular board opportunity.
7. Is this exciting me? Do I REALLY want this?
Joining a board is a full mind and body commitment, and it can impact on our workplace and family time. This makes joining a board something that you don’t want to jump into at the drop of a hat. I would also hate to see you take on a board role just to be able to tell people that you’re on a board. Or because your friend has asked you to (see question 5, above).
Checking in with your level of interest (i.e. your answer to question 2) and excitement with what the organisation does and is wanting to achieve will help you to understand whether you REALLY want this board role. The level of time, effort, and energy you will expend as a board member has to meet your level of interest in it, otherwise you’ll end up frustrated, resentful, and do a half-a** job. It’s not worth letting your board reputation and future board prospects suffer.
Being excited for the organisation’s purpose will also help carry you through the challenging times, when they come along.
When evaluating a board opportunity there are many more considerations beyond the financial health of the organisation. These questions will help to expand your assessment of any board opportunity, whether received via a board recruitment process or via a direct invitation.
What other questions do you ask yourself when evaluating board opportunities? Share them in the comments below.