Why good executives don’t always become good directors

19 Nov 2019

Why good executives don’t always become good directors

If you’re after your first board position, you need to fully understand what defines an effective director, as our guide makes clear.

The skills and behavioural characteristics of effective directors differ notably from those of successful executives. Quite simply, the two roles are very different, as our guide to getting your first board position explains.

Unlike the day-to-day leaders of an organisation, independent directors do not serve in an executive capacity. They do not get to make decisions and then unilaterally implement them down a chain of command.

Executives often need a move-fast, non-consensus mindset, but that is generally the opposite of the approach required in the boardroom.

By contrast, a board of directors is a collaborative team of advisors whose role is to affect growth, approve the strategy, and represent the fiduciary interests of their shareholders.

Looking well ahead

It’s true that part of the role of an independent director is to manage and oversee short-term decision-making. Directors have to ensure that the executive team is meeting its quarterly goals and to monitor the short-term health of the firm. But for most companies, particularly healthy ones, a director’s biggest contribution is usually their ability to see beyond the executive horizon. They need to help chart the company’s long-term path forward.

This kind of long-term, strategic oversight is much easier to undertake in an environment where consensus, rather than directive, is the methodology of change. Plenty of directors have failed spectacularly in the boardroom precisely because of the hard-driving, non-consensus mindset that made them so successful as corporate executives.

What makes a successful director?

Successful directors tend to have a complex mixture of professional competency, work ethic, and collaborative skills. They are confident, but not arrogant.

So what is the ideal company director’s skill set?

Skillset, in this context, can be roughly defined as a person’s professional roles and accomplishments. In other words, what you’re good at and what specialist knowledge and experience you can bring to the board.

For example, a banking COO with 20 years of experience has operational expertise in the banking industry, plus the wisdom they’ve gathered during their career. Another director’s skill set might include experience growing companies, including managing the logistics and risks of offshore expansion.

What are companies looking for?

In the old-fashioned boardroom, one or two specialists (generally with financial or legal experience) would sit alongside seven or eight generalists with prior experience in corporate governance or as an executive in another industry.

The modern board, by contrast, is a medley of industry-relevant specialists where each member is expected to contribute a particular strategic perspective to the organisation.

Across industries, there is widespread demand for expertise in technology, marketing, demographics, entrepreneurship, and international business, to name a few. Nowadays, companies often begin their search for a director by identifying the skill set they’d like to import onto the board. Then they or their executive search firms look for an individual with the expertise to match.

Successful directors today bring a unique, relevant, and—most importantly—current skill set to the boardroom. For this reason, it is imperative that in preparing yourself for a board position, you identify and put into words exactly what set of skills and experiences you can offer.

But skill sets are just one side of the coin. In our guide to getting on your first board, we tackle (amongst other things) the other important dimension: mindset.

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