Former chief executive officers and chief financial officers are in high demand as non-executive company board members. They know how to run a business, and what to look for in board packs. It is hard to pull the wool over the eyes of someone who has first-hand experience of all aspects of business. While it may seem like a natural progression to move from the corner office to the boardroom, it is not for everyone, however. There are hurdles to be overcome, and not everyone is prepared for the radical shift in thinking required to make the transition successfully.
In our experience, the hardest change to accept is that as a non-executive board member, you are no longer running the show. You may be used to having teams of people around you to delegate to, but you’ll now need to get used to functioning independently, and desist from meddling and trying to exert undue influence. This may be less of a problem if you join the board of a company at which you did not hold some kind of executive office in the past.
Another mind-shift you’ll need to make is recognising that as a board member, you now have to consider a much broader set of people. Your main role is to look after the interests of shareholders and other stakeholders. You need to be satisfied that the company executives are delivering on business strategy on shareholders’ behalf. You are essentially now on the other side of the fence and instead of calling the shots, you are there to act as a sounding board and provide wise counsel to these executives.
I believe the biggest challenge is making the shift from CEO to board chairperson. A good chairperson really needs charm and a firm hand in equal measures. You’ll also need to have a wide network of influencers, oceans of wisdom and a very open mind. You’ll have to be able to manage diversity in the boardroom, which can be tough. Taking into account cultural habits and differences and building rapport between board members from all over the world when they meet only three or four times a year, is not an easy task.
So how can executives heading into the boardroom prepare for the transition?
- Ask why you want to do this. If it is for the money, rather stay at executive level – as a board member, you ought to be independent enough not to be influenced by remuneration. It should be about the skills and counsel you have to offer shareholders and other stakeholders.
- Take a directorship course or two to ensure you are up to date with governance and compliance issues, the unwritten rules of board etiquette, and how to succeed in your new role. Institutions like INSEAD, Harvard Business School and London Business School offer excellent courses.
- Take a break between stepping down as a top executive and joining a company board, especially if it is the board of the company you’ve worked for up till now. Some distance between the two roles is crucial to demonstrate independence as a board member – a minimum of one year is recommended.
Lastly, it is a good idea to ask other board chairpersons and experienced non-executive board members for advice – if they know you well, they’ll be in an excellent position to judge whether you would be a good match for a particular company board. If they were themselves former executives, they should also be able to assist with preparing you for a successful and smooth transition to your new role as a company director.
It might seem rather surprising that ‘collaboration’ is the theme for this issue of Obse...
Tony Crawford is the Chief Financial Officer, as well as the Head of Club and State Services, for...