The Effective New Director
Taking on a director role is one of those ‘big step up’ changes. Even if you already have most if not all of the necessary skills and experience, applying that ‘nous’ to the boardroom takes some adjustment, some realignment, a new perspective.
Sitting there for the first time, do you know as much as you should about your new role? What about the role of the board itself? What is your contribution going to be?
In this first blog post to support our programme of Boardroom Effectiveness events, we’ll start with some basics around roles and responsibilities and what you need to know to get started, before digging deeper into specific aspects of directorship in future posts.
The director’s role
No surprise that the specifics of a director’s role vary, depending on the business they’re directing. You could say that the ‘foundation stone’ is governance, but what does that mean in practice? The following list of basic responsibilities is derived from the www.gov.uk website:
- Company constitution – This may be an obvious one, but given that your company’s constitution and articles of association effectively set out the rules for running the company, you’re expected to act in accordance with them.
- Promote success – In other words, you have a basic responsibility to act in the company’s best interests. This includes the need to consider the long-term consequences of board decisions, the interests of the workforce, the relationships with customers and suppliers, and the company’s impact on the environment and surrounding community. Furthermore, directors should bear in mind the company reputation.
- Independence – As a director, you are independent. Yes, you work as a part of the Board. Yes, you can seek and accept advice. But your decisions are yours, and should stem from your own judgement.
- Reasonable care, skill and diligence – Or to put it another way, bring your best game to the role. Directors are expected to bring their skills, qualifications and experience to bear on company matters. In essence, the more you have, the more is expected of you.
- Conflicts of interest – Avoid them. If you find yourself in a conflicted position (e.g. a clash of personal or family interests with what’s best for the company) you must declare that conflict to your fellow directors and then be guided by the company’s articles of association.
- 3rd party benefits – Again, in the vein of avoiding conflicts of interest, you cannot take benefits offered by a third party. Your company may have further guidance on this issue, such as being able to accept “reasonable corporate hospitality” in non-conflicting circumstances.
- Interests in a transaction – When it comes to specific company transactions, again, as an extension of the above principle, you must declare any potential personal benefit to your fellow directors.
What information do you need to get started?
As with any new role or position, you should receive some kind of induction or orientation. It may be a little grand to describe it as onboarding but the following suggested list gives you the recommended essential items of information that you should receive… or, if not, that you should ask for:
- A short outline of the company’s history – what is it, what does it do, why, and the key events that have shaped it to date?
- An organisational chart showing key personnel and teams… and a list of all board members, ideally with a little biographical/role information on each (#knowyourcodirectors).
- Clarity on the board’s roles and responsibilities – yes, the above list from www.gov.uk is good, but how does it translate to specifics in your company?
- Strategic plan or similar – whatever form of document exists that lays out the top level focus of the company (vision, mission statement, values…)
- Current priorities – what, specifically, is the company up to at the moment; what projects, campaigns, initiatives and objectives are of key importance right now? And also, which board members are responsible for / involved in each?
- Details of the current budget and financial position (including the most recent reports, returns and audits).
- Calendar – what are there in the way of upcoming board meetings and other board-related events? …and you’ll need a copy of the agenda for the next meeting (your first as director).
- Minutes of previous board meetings (the most recent three should give a comprehensive enough picture but feel free to read more).
As snapshots go, the above hopefully offers a clear direction for new directors. Though having acquainted yourself with the role and the ‘paperwork’, the next step is understanding how it all works in practice. Sure, the underlying principles should be as stated above but the operational realities and details will be specific to your company.
For more on the director role and how boards function, check out our Boardroom Effectiveness programme of events; or give us a call on 01582 463465. We’re here to help.