Avoid the pitfalls

For a new director, a carefully crafted 90-day plan makes for a smoother transition to governance and adds more value in the first year on a board. Tony Featherstone reports.

An aspiring director, eager to impress, attends his first board meeting armed with a laptop and a long list of questions. In between furiously typing meeting notes, the director asks too many questions and occasionally talks over other directors to be heard.

A few days later, the director calls the chief executive officer (CEO) for information and suggests an idea. The CEO, usually happy to help directors, is annoyed to have been interrupted during a deal and that board and executive communication protocols have been broken.

The new director’s desire to make a strong impression and add value to the board from day one backfires. His downfall is poor planning for the first 90 days after being appointed and a low understanding of board transitions.

Robyn Weatherley, a founding member of the National Australia Bank’s Board Ready program and author of a useful new book for first-time directors, Eyes Wide Open, has seen this situation too many times.

“I’ve watched directors over the years try too hard in their first board meeting through misplaced good intentions. Being too aggressive at the start can set you back on the impression you actually want to make. All your actions in those early board meetings speak to the chairman, other directors, executives and the secretariat. They will be watching how the new director fits in.”

Crafting a 90-day plan can help first-time directors make a smoother transition to governance and add more value in the first year on the board, Weatherley says. A strong initial 90 days can also build a base for the director to govern for many years.

Board transition planning differs from executive transition. A 90-day plan for executives might help them get up to speed quickly so they can fix problems, identify opportunities and kick early goals. A similar plan for new directors might be about understanding organisation and board policies, building a relationship with the company secretary and other directors and executives, developing an information set, understanding the organisation’s strategy, risks and pressure points, and board culture.

“Think of the first 90 days as the adaptive phase,” says Weatherley. “Unless you’ve hit a board in severe crisis, no-one expects momentous contributions from new directors in the first few meetings, so use that time to listen, learn, read and prepare.” Company Director asked Weatherley for her advice on how first-time directors should transition to the board.

CD: Robyn, when should transition planning start?

RW: Obviously, the director should have thought about how to add value and their transition to the board during the due-diligence process. That planning should be put into action as soon as the director is appointed because a lot of work must be done before the first meeting.

CD: How important is the board induction program to the transition?

RW: It’s critical and can vary by organisation size. A larger organisation will typically have an organised, controlled induction program that helps new directors get up to speed through meeting executives, information packs and attending board committee meetings. A smaller organisation might have a less structured approach, with the onus more on the new director to find information and meet people.
A good induction program provides the information needed to learn about the organisation and board, and the opportunity to ask apparent dumb questions offline at the start, rather than in front of the full board. It is also an opportunity to show executives or other directors you have an acute interest in the business, build relationships and make a strong impression. If you have not heard about the induction program within a fortnight, follow it up. It’s too important to overlook.

CD: How important is the company secretary in the transition process?

RW: It’s very useful to meet the company secretary and start building a relationship. The company secretary usually has the company’s pulse and knows the people you need to know. He or she can also talk you through key policies, such as those around conflicts, and share-ownership requirements, or directors and officers liability insurance, for example.

The company secretary can also explain any communication protocols on the board, or between directors and management. Some chairmen prefer board questions for executives to come via them, and some executive teams have protocols for when and how they respond to board questions. One can easily make an unfortunate impression if these processes are not understood and followed.

CD: Who else should a first-time director meet?

RW: If you didn’t meet them in the nominations process, definitely meet the CEO and some of their direct reports before the first meeting, and at least a few other directors. Knowing a few faces during the first board meeting can help nervous new directors feel more relaxed.

Very early in your tenure, with the chairman’s permission, get along to some board committee meetings, particularly for risk, finance, strategy or IT. That will help develop your understanding of key issues at a committee level. Your attendance also shows you are committed to learning about the organisation and its governance issues, and are willing to invest extra time at the start. It leaves a great impression.

CD: What type of reading should you do before the first board meeting?

RW: A good director will have done a considerable amount of reading on the company and its industry during the due diligence. If it wasn’t available during the nominations process, ask for the last three to six board packs noting the minutes in particular.

During conversations with other directors, try to get a sense of the half-dozen key issues or pressure points. Build your research around those points. Also check if you should subscribe to industry associations, web distributions or journals.

CD: What are your best tips for the first board meeting?

RW: Watch how other directors raise questions, and how executives respond. Take particular note of how the chairman runs the meetings, how directors interact, and if there are any obvious boardroom dynamics or politics. Don’t sit next to the chairman. This seat is usually reserved for the company secretary who needs to be close to the chairman to manage logistics.

CD: What are some common mistakes?

RW: Be careful with technology in board meetings. Using an iPad to access board papers is fine. Checking emails or the web on any device is bad form and forensically traceable if something goes wrong. Also, don’t talk over other people and watch your body language. Most of all, prepare well. Executives and other directors will pick you out a mile away if you have not read the board papers.