Accepting a Seat on a Board
The first time I was presented with an opportunity to join a board, I was so flattered that I agreed to join without really considering whether it was right for me to do so. That is, right for the company and right for me. Luckily, it was a strong board and while I don’t feel that I contributed as much as a good director should, I feel that I made a few key contributions while learning a lot about the role of the board and it’s interaction with the CEO.
The next few boards I joined, though, turned out to be far less appropriate for me. I wasn’t equipped to contribute as much as a director should and, more often than I expected, the CEO wasn’t looking for guidance as much as he/she was simply looking to fill a seat at the table – either to add a known name to the company’s list of advisors, or to satisfy a requirement made by investors.
Thinking back on it, the situation reminds me of the 80s television hit, Night Court, in which a young judge is appointed to the bench in New York. Judge Harry Stone is as unlikely a judge as one could find and, according to the show, he’s appointed because:
“… the mayor was filling all open seats on the last day of his term, and Stone was the only nominee on the list at home to answer his phone.”
For at least some of the boards I joined, I’m sure my name was pretty low on the list of candidates but I just happened to be available. Obviously, a crappy reason for either the company or the prospective director for joining as important a group as a board of directors.
While I can’t control the criteria created by the companies that ask me to join their boards, these days, I’ve gotten much better at determining which directorships are a fit for me and which ones aren’t. In making this determination, it’s always my goal to both make sure that the position will work for me and, to the best of my knowledge, make sure that it’s the right move for the company. I’ve turned down several invitations to join boards that I thought would be really cool because I didn’t think I could add enough value as a director.
To make the choice on which boards to join, I’ve set up some basic rules that help me quickly determine if an opportunity is even worth considering.
- Can I handle the load?
- There are people who take on too many directorships at a time, in my opinion. Because I tend to be fairly operationally biased, I know that I can only handle 3-5 directorships at a time. When things are going well in the companies I work with, I have loads of spare time, but when things are going poorly, which seems to happen at all companies I work with at the same time, it wouldn’t be fair if I don’t have the time to help any one of them out.
- Am I truly interested in what the company is doing?
- If I’m not genuinely interested in what the company is up to, I won’t give it my all. The best boards are those that offer constant learning experiences. It’s those boards that I’m eager to contribute to.
- Can I help? Do I have knowledge and/or experience that will be valuable to this company.
- It’s taken me a long time, but I now know the small pool of things that I know and I have a much better understanding of the oceans of things that I don’t know anything about. If I don’t already know most of what you need me to know, I’m of little value.
- Is the CEO looking for guidance or is he/she looking to fill a seat at the table.
- You don’t have to do what I say, but you have to ask, listen and consider my response. If you don’t, we’re both wasting our time.
- Can I make some money?
- Unless the Board we’re talking about is a non-profit, any advisor worth his/her salt will want to see a path to some income for their efforts. Of course, any compensation will most likely be in the form of equity, but for some companies, cash or, some combination, is a better option. I hate to sound like a greedy bastard, but my efforts, for the most part, are worth what you pay for them. If they’re not worth something to you, see 4, above.
Since I’ve adopted these criteria (OK . . . guidelines), I think I’ve become a much better board member. I feel I can contribute more and am much more available to the CEOs of the companies that I work with.
There are many fewer people available these days to fill the expanding number of directorships being created. As such, more people will have the opportunity to join boards and build a similar set of rules for how they pick which ones are most applicable. Those looking to recruit directors should also establish a similar set of rules to make sure they make the best decision. Understanding the criteria for both sides will ultimately help to establish the best, long-lasting relationship for the company.