by Jessica Apfel
Becoming a non-executive director is not a continuation of your style and approach as an executive.
No matter how brightly you shone as a leader, or how sharp you were in your career, to be a first-class board member you will need to reinvent your communication style, mindset and approach.
Non-executives must always remember they are there to look after the shareholders, the customers and the staff. To do this, they must understand the business to anticipate when things are about to go wrong.
This kind of preparedness doesn’t come from talking to the head of audit over morning tea, it comes from getting involved.
We’re talking about:
- Really understanding the business.
- Going on ‘ride ons’.
- Talking to the executives at length.
- Asking the right questions at the right time…without overreaching.
Truly understanding the business and where the opportunities lie adds real value, whereas simply correcting spelling mistakes in the board papers does not.
Broaden your horizons: gain experience and understanding
Boards are a composition of various people-types and experiences. But those who have a broad understanding of business will add more value than those with a narrow purview.
Macroeconomics and financial management
Not everyone has had experience as a bean counter, but understanding and interpreting the full set of an organisation’s financials is a profoundly useful tool for directors.
Knowing the key ratios for the business and how they change over time is critical, particularly as regulators increase scrutiny. As HBR says, ‘can you talk in numbers, not just in words?’
And while microeconomics is useful, understanding the bigger macroeconomic picture often provides insight for new opportunities or can foreshadow dramatic change.
Are you abreast of what’s happening in the economy? Do you understand the financial markets and how economists are thinking about the future? What will happen to your industry?
The language of finance is esoteric, but it’s worth reading through annual reports and governance documentation to familiarise yourself with the terminology.
Strategic development and thinking
The board has a unique role in setting organisational strategy in collaboration with the CEO and executive team, so it pays to know how it all works.
Ensure you understand the business models operating in your sector. How does your company make money? How do competitor’s business models work? Take the time to research and understand new business models emerging in the market.
As technology changes, so too will the business opportunities for you and your competitors. Having your finger on the pulse of new ways of working or changing customer habits will result in forward-thinking guidance.
Experience in strategic thinking is invaluable, so get more experience. Understand how to reach the hearts and minds of a team and ways to direct them to a goal. Learn to identify what can go wrong in developing a strategy, such as the execution traps.
Get exposure to your own board
If you’re still in an executive role, leverage your existing board and their experience.
As much as possible, seek out opportunities to attend board meetings, connect with your own directors or take them on company tours or ‘ride ons’.
Attend your own company’s Annual General Meeting, or that of your competitors. Many are online now and are easy to join.
Build your networks
People have a wealth of knowledge and the board community in Australia is small and intimate. Directors frequently talk to each other and are often asked to recommend potential directors to other boards.
Get to know as many directors as you can and learn from them.
If you’re looking for a board role, introduce yourself to specific board recruiters and ask their advice. Each time you meet a director, ask for a referral to another one.
Preparing to be a director doesn’t happen in a week or a month, it takes a career to prepare.
But if you’re ready for the challenge, these are the things you can start to do to broaden your mindset and skills and evolve from being an executive to a director.
Jessica Apfel is Associate Partner from Sterling Black, a specialist Board and CEO leadership firm. They provide clear recommendations about Board and CEO leadership; practical CEO succession advice and build the capability of leaders so that your organisation will succeed.