An invitation to join a board is significant. Before accepting a board position there are a number of things directors need to consider.
You’ve been asked to join a board
How do you assess whether it’s the right position for you? Your decision about whether to join a board depends on an investigation and analysis of two basic questions:
- Are you personally and professionally suitable for the position?
- Is the company suitable for you?
There are many valid reasons for accepting a board position − desire to add value, to broaden your skills and experience, to further develop networks, remuneration. But remember a board position brings with it personal responsibility and risk. Don’t be swayed by loyalty, status, prestige or wanting to keep a ‘finger in the pie’ after retirement, without doing a thorough assessment of the risks involved.
- Skills and experience
You need to assess whether you have the right skills and experience to complement other directors on the board and to take the organisation forward with its strategic plan.
- Time commitment
Ascertain the commitment from the chair before committing.
- Conflicts of interests
You need to assess whether you have the independence necessary to make clear, impartial decisions, unhampered by present involvements that would interfere with you acting in the best interests of the organisation.
In order to satisfy yourself that you want to invest your time and reputation in an organisation you need to conduct a thorough due diligence and be satisfied of:
- The company’s financial position
- not just the financial statements for the last three years but be satisfied about their accuracy and the reasons for any peculiarities.
- Board capability and operation
- The boards vision and strategy, the leadership of the chair, the skills of the existing directors, the effectiveness of operations.
- Management capability and operation
- Skills and experience of the CEO and senior management, the relationship between the chair and CEO, the reputation of the company, the quality of the company’s risk management.
- Directors’ liability insurance
- Ensure the company’s constitution allows it to idemnify or insure director’s liability, company policy on paying premiums, desirability for extra cover.
Download our Board appointments checklist to help you self-assess yourself, and the board, when considering whether to accept a new board role.
For more detailed information on assessing whether a board position is right for you, see the Due diligence section of IoD’s The Four Pillars of Governance Best Practice