Congratulations, you’ve been asked to join a board of directors. Regardless of how you found the opportunity (from your network, a search firm, or via theBoardlist), you’ve now got a decision to make thoughtfully and carefully.
During your interview process, we advise you to get to know the company — and your future colleagues — as well as you can. But, before you accept that new role, it’s important to review these five things first…
Who are the investors and where’s the revenue coming from?
Follow the money. This means if you are about to join a private board, it is absolutely “fair game” to ask about the different sources of revenue of the company, as well as the complete list of its investors. Or, if it’s a public board, to dig into the financials yourself.
After all, you don’t want to land in a board where there are several conflicts of interest — with you or within the board. In the words of Sara Speer Selder of The Project Management Team — “do not join a board that is a growing friends group.” Instead, look for a board with clear focus and expertise that takes its governance role seriously.
Is the board committed to diversity?
Another question to ask before joining a board is how committed the board (and the company) is to promoting diversity. We have previously explained why having women in leadership roles benefits companies and it is well established that more diverse companies have better financial returns. Therefore, it is important to check if the board you are about to join is truly committed to hiring more women and other minority groups. Some have said it louder, but none said it better than Beth Crocker:
“(…) it should come as no surprise that the world’s largest asset managers view diversity in leadership as a means to drive better financial performance in the same way diversity in securities can deliver better portfolio returns. The proof is in the numbers. Per Catalyst’s research, Companies with the most women board directors had 16 percent higher Return on Sales (ROS) than those with the least, and 26 percent higher Return on Invested Capital (ROIC).”
What is the board’s vision for the future?
Along the same line of thinking, it’s important to take into account the board’s vision for the future. Ask if there is a clear vision of the future of the company and a thoroughly planned strategy to achieve those goals. When appropriate, and depending on the answer, ask if there has been a risk assessment and how those risks might affect the board’s agenda. In case there is not such a vision, maybe you should not commit to this board for years to come.
What is the company’s overall financial position?
Without a doubt, this is one of the key questions you should ask before becoming a board member. Review all the available documents, including reports, public filings and stock prices. Take into account the macroeconomic environment and compare your company’s position to its competitors; ask the board if they prospect any changes that might impact business. In this article, Sara Brody of Sidley Austin goes as far as asking which are the external auditors of the company and its regular advisors.
What does the board expect of you?
It might sound a bit daring, but this is something that you need to ask, especially if it was not clear during the interview process (which in itself is a red flag!). What does the board expect of you once you join? Can you bring fresh ideas to the board, contribute with a skill that has been lacking? Does the board expect you to donate money or engage in fundraising? As diplomatically as possible in these situations, try to know exactly what you are signing up for and prevent future misunderstandings — do not let the board expect more that you are willing to give.
Ultimately, current board members should trust you enough to disclose the answers to all these questions — if they do not, then that’s a red flag. Joining a board is something you should consider carefully, without forgetting that it should be an opportunity to advance your career and benefit the organization. So seek a win-win situation, and that can only happen in a company that you will be proud to be associated with — now and in the future.