Okay – so you are interested in becoming a company director. A lot of people share your interest. It is a satisfying and financially attractive career option. But not a lot of people will tell you how to get paid board positions and this is especially true if, like most of us, you are not already the CEO of a large listed corporation.
The good news is that, no matter where you are starting from, it is relatively easy to build a career as a company director. Obviously, if you are starting out and have few corporate credentials it will take longer to get to where you want to be and if you already have a successful corporate career it will be a quicker process. The successful corporate career is not a necessary precondition for a successful board career.
Regardless of where you are starting from it is essential to get some education so that you understand the very special legal environment that boards work in. I recommend the Association of Corporate Directors (in America), The Institute of Directors (in the UK), and the Australian Institute of Company Directors (in Australia) as providers of good quality specialist board and director education products.
There are plenty of books available for you to read in your own home (and at less cost than attending courses). My favourite reference texts for aspiring directors are ‘Conversations With a New Director’ by Henry Bosch, ‘Corporate Governance’ by R I Tricker and ‘Boards That Make a Difference’ by John Carver. My free newsletter ‘The Director’s Dilemma’ will also give you some idea of what you are likely to face in the boardroom. It comes out monthly and will help you to keep focused on developing your skill as a director. It is available at www.mclellan.com.au/newsletter.html.
You need experience before you start!
Once you know what you are supposed to be doing you need to get some experience. This is the hurdle where many aspiring directors fall in a heap. Before you can get on a board you must have something of value to offer that board (what’s in it for them? Why would they choose you and not some more experienced applicant?). It is important to do a skills audit and work out exactly what you can offer. If the only things you have are energy and enthusiasm that should not hold you back. It is all I had when I started!
Work out what sort of company you are enthusiastic about. Why are you passionate about it? What would you do if you were allowed to work on the board of such a company? What not-for-profit organisations operate in the industry/area that interests you most? When you are clear about what you would do and where your passions lie just take a deep breath and call a few CEO’s of non-profit organisations and ask them I they need board members or if they know of other organisations in the same general area of activity that may need board members. You will be amazed at how quickly a network will open up if you are truly passionate about helping and being on the board.
My first board was a not-for-profit that administered a trust fund for supporting engineering students who otherwise might have to leave their studies. I’m an engineer, received a grant from a similar fund myself in the past, and was delighted to serve on the board as a way of giving back to the profession as well as advancing my own career aspirations. I wasn’t paid but that wasn’t important for me. I was now on track.
More than money
Are you horrified at the idea of taking on a directorship without pay? I know that you will carry a big personal liability as soon as you become a director and acknowledge that you should be paid but, the sad fact is, you probably won’t be. If you wanted to become a professional horse rider you would be expected to learn to ride before anyone would let you ride their horses and then to prove your expertise as an amateur before anyone would pay you. The same is true of singing, dancing or any of the really fun careers. Directors need to learn how to perform on the job before they can expect to command the high fees and have the portfolio of directorships that the top professionals have.
From your starting position you will need to demonstrate that you can add value as a board member. Take a note of what is happening in your boardroom. When are you most effective? By this I do not mean ‘what do you talk about most?’ You are effective when the rest of the board are paying attention to what you say and then they ensure that the company acts on what you said.
I expected to be most effective, given my engineering background, in discussions about CapEx (Capital Expenditure – did I mention earlier in this guide that you need to learn specific board stuff?) and engineering projects. Where I really add value is in corporate strategy and board effectiveness. I am quite gifted at getting the systems and processes to support the board rather than having the board support the systems and processes. I’m also very good at working out useful KPIs for monitoring strategy and at sanity checking strategy proposals.
Your unique value add
Trust me, when I talk to a board recruiter (with concrete examples) about how I can ensure the company does what it is supposed to do and that the board has an effective controls system in place so they can concentrate on driving performance I now get listened to. My reference checks confirm that I do what I say and the result is that I get hired by more boards at better fee rates.
So, back to you; when do your board colleagues pay attention and when do you have a positive impact on the company? Take notes and check that your perception is correct by asking the Chairman (best) or a friendly board colleague.
Once you know what you offer it is time to find out what that is worth. This is the second hurdle that trips aspiring directors and sends them straying from their path.
Advice not placement
Getting your first paid board seat is a major step forwards in your career. Start by asking any colleagues who have paid seats for a frank assessment of whether you are ready to take that step. Do not ask them for a seat on their boards. Directors hate having to say ‘no’ to aspirants. If you ask for their advice they are usually very happy to give it. They get even happier if they see you take it!
If the advice is that you need to improve some aspect of your director performance make sure that you ask them how you might do this and then that you follow their guidance. Thank them at the time they give the advice for giving you the benefit of their experience. In six months time you can delight them by saying ‘Thank you for that advice; I have now done a course on interpreting accounts/nuero-linguistic programming/whatever and I’m ready to move on to the next step. Is there anything else I should be working on?’
You will soon find that you have developed a few supportive mentors to help you in your quest for paid board seats. These people will be able to recommend you to board recruiters.
At this stage you should also be ready to have some serious discussions with Executive Search Consultants (only call them headhunters behind their backs). Remember that the headhunter works for the board not the applicant and they will not have much time to spare. If they show interest and take your CV (resume) for their files it does not mean that you are automatically going to be offered a board seat. It does, however, mean that you have reached a level at which you are considered a serious candidate. If headhunters offer you advice, take it and thank them. They are professionals and their advice is usually very good.
Another good place to seek paid board seats is through director databases. The AICD (Australian Institute of Company Directors) runs an excellent register of directors available for board seats and I have had two paid positions from companies that found my CV on that database. Does your local director institution have a similar service?
Government sector boards are another good place to start. Governments like to be seen to follow best practice recruitment processes and many governments run databases or openly advertise board seats in the relevant press or on their websites. Governance of a government owned organisation is very different to that of a not-for-profit or commercial sector organisation. You should read the enabling legislation, become familiar with the over-arching legal framework and develop a good understanding of relevant government policies affecting your organisation. A good reference book is ‘All Above Board: Great Governance for the Government Sector’ it is widely available from specialist retailers and websites.
Governments typically have more diversity on their boards than shareholders of commercial companies (where the founding shareholders and incumbent directors can recruit from their own networks). You should find that these boards allow you to develop a wide network and to showcase your skills to a broader audience. As people get to know you as a ‘value adding’ director you will start to receive unsolicited offer of additional board seats. This is especially true if you let it be known that you are interested in building your portfolio (without asking for a position on any specific board).
As you build your portfolio you will gain experience and this will increase your attractiveness to other boards. A good book for gaining experience quickly is The Board by James Ukropina. It gives a very realistic view of life in the boardroom. I admit that the hero is a big better than most real life men but that is obviously all part of being a hero.
Be careful not to take every board seat that is offered to you. You need to manage your reputation. Ideally the board should offer you increased exposure to interesting issues that you have the skills to deal with. Do not sit on boards where you don’t add value. You are only increasing your potential for reputation damage if things go wrong and also running the risk of getting a reputation as a ‘passive’ director. Make sure that, if you join a board, within months your colleagues will be saying how valuable you are. Be patient and only pick the boards that will allow you to make a good contribution.
After a while you will suddenly find that you have built a portfolio that consumes your passions and fuels your desire to keep on contributing. You should also find that you can now make a satisfactory living from paid board seats alone.
There are so many people who will tell you that ‘if you want to be a company director you need to be someone whom you are not’. I call them ‘dream-takers’. Don’t let them take your dream. If you want to be a director then you can be. It will take time. It will take hard work. It will mean that you will have to learn stuff you don’t currently know. But, if you put in the effort, you can do it.
So go on – be a ‘dream-maker’ and make your dream come true. Send me an email and let me know if this guide has been helpful. It is based on my own experience and I know it worked for me.
I hope I meet you on a board some day. Until then; good luck with your quest!