As with any occupation or leadership role, board directors should aspire to be at the top of their game. Because of the key role they provide as leaders, board directors may be held accountable and liable for their decisions. In these volatile times, shareholders have high expectations for board performance. Board development helps board directors govern their best and stay at the top of their game.
Board development is for prospective board directors, new directors and existing directors. The quality of the board determines the long-term success of the corporation, and board development is a vital component that keeps boards strong.
Why Do Board Directors Need Board Development?
Board directors have many duties and responsibilities. Each board director will know more about certain matters than other issues. It's the collective perspectives and collaboration that create the best environment for sound decision-making. The stronger the individual directors are, the stronger the board will be as a unit.
Board service can be particularly challenging for independent non-executive directors. They are inherently more removed from management than some of their peers; however, they still need to be well-informed, so they can make good decisions about mitigating risk and monitoring performance.
The YMCA: Example of a Board Building Cycle
The YMCA is a long-established organization. They've established a distinct nine-step process for their board-building cycle, as follows:
1. Identify passionate, cause-driven board members who have the necessary influence, skills and experience to support the YMCA's goals.
2. Cultivate potential board members.
3. Recruit board members.
4. Orient board members to their roles and responsibilities and the structure of the board, and indoctrinate them in the YMCA's history, mission and strategic goals.
5. Involve all board directors in meaningful experiences, including well-run meetings and committees, and encourage them to use their skills, passion and time for the organization's purposes.
6. Educate board members by providing ongoing opportunities to expand their knowledge, awareness and understanding of the YMCA and its community.
7. Evaluate the whole board and individual directors annually, using established criteria.
8. Rotate the board to achieve a balance between new members, who bring objectivity and fresh ideas, with more experienced members, who have institutional memory and other valuable knowledge and resources.
9. Celebrate the board's achievements and establish practices to recognize the work of the board and that of the individual directors.
Approaches to Board Education
There's no exact right way to approach board education. The only wrong way is not to do it at all. There are benefits to creating opportunities for individual director education and the group approach to director evaluation. There's no downside either way.
Boards that pursue opportunities for education benefit from learning together. Group education improves peer relationships and strengthens board dynamics. Educational opportunities help boards get on the same page with learning about things like the liabilities they face individually and collectively. Together, they can learn how to ensure compliance with best practices and regulatory matters. By taking the same courses and workshops, they'll learn how to improve their leadership skills and make better short- and long-term plans for the corporation. As shareholder activism grows, education will help board directors respond to it responsibly.
More commonly, boards will take an individual director approach to board training and development. Board evaluations usually set the stage for identifying the areas where board directors need to improve their skills. Most board directors will already have a broad idea of what skills they need to improve. New board directors who pursue opportunities soon after being appointed will get up to speed faster on governance and other important board issues than those who wait to pursue board development opportunities.
Topics for Board Education
Various companies exist that provide training for board directors. Directors may be able to take webinars, listen to podcasts, register for written courses and take in-person sessions. Self-study is also a good format for some board directors, and there is a wealth of information on governance and other board matters available in book form. Governance consultants are also a good resource for locating opportunities for board education.
Because of the varying amounts of board experience and expertise, boards should look for educational resources that cover a wide variety of topics, like the ones that follow.
The topic of governance covers a wide variety of subjects. Board directors should be able to find courses and other resources on the history of corporate governance, business, ethics, succession planning and recruiting, nominating and appointing board directors. Other governance topics include non-executive and independent directors, induction and orientation, and monitoring board performance. Finding one resource for education on governance may lead to additional educational resources.
Skills and Qualities of an Effective Director
Board directors may want or need to work on their skills, such as how to develop good relationships with senior executives. Board directors may also find it challenging when dealing with family-owned companies and private companies. Other important topics that board directors may want to explore include learning more about compliance and how it relates to their fiduciary duties. These are just a small sampling of potential topics that can help board directors improve their skills.
Leadership Direction and Strategy
Many board directors have some type of leadership experience before joining a corporate board. While general leadership skills form a good base of skills, board directors may look for educational opportunities that help them apply those skills to board work. Board directors may need more application-based leadership skills, such as how to leverage the corporation's potential, manage data and information, mitigate risks and protect the corporation's reputation.
There is much for boards to learn about their roles, duties and responsibilities. They should also be learning about other roles such as serving on committees, serving as committee chair or board chair, and performing the duties of the Company Secretary.
Board development is especially prudent right now in light of current market volatility and the critical eye of the shareholders. The topics for board development are endless, and with such a wide variety of options at their disposal, there's no better time to get started than the present.
If you think about it, in most professional industries and career paths, professionals are required to pursue some type of continuing education. Board development is much the same, and it's recommended for all the same reasons.