Getting Onto the Board

AS SOMEONE WITH A GREAT passion for business, I aspired to serve on boards of directors, overseeing corporate strategies and policies. Yet, in the 21st century, board membership not only requires a huge time commitment, but also entails risks to one's personal reputation and wealth through legal liabilities.

My first board experience helped to convince me to assume these risks to participate at the highest level of business leadership. And yet, the first Non-Executive Director (NED) position I accepted almost didn't happen. About eight years ago, a search firm recruiter called me and described a privately held company that employed a fifth-generation family member as CEO and Chairman. The recruiter said the board of this company wanted me to interview to be considered for an open board position.

Having never heard of the company and being snobbish about wanting a public corporation, I first said I was not interested. The recruiter encouraged me to spend a day in conversation with the CEO. That day changed my life. The CEO proved to be a visionary leader who combined the disciplines used by a public company with the long-term approach to building values that defines family companies. This company operated convenience food stores in selected areas of the Eastern part of the U.S. that produced sales of about $1 billion. My due diligence and meeting with the CEO convinced me to accept the board position. And it was this board experience that led to other NED positions in public companies.

Perhaps you have ignored the opportunities of working with private companies. Statistical information indicates that many private companies are start-ups and hold more operational board meetings than public companies. Some potential board members may well think that they don't have the time to serve, given their other responsibilities, professionally and personally. One of the key questions is to find out how many board meetings are required and the locations of those meetings. Every company is different just as everyone's schedule and priorities are different.

One reason women appear underrepresented on boards is that they have ignored the opportunities available in small quality companies. I almost made that mistake and am glad I listened to an advisor who encouraged me to take the time to investigate the convenience store chain on which I still serve as an NED.

Let's look at the current situation of women serving on boards. Today, women make up only about 15 percent of all directorships of the Fortune 500. There may be a couple of reasons for this. One recruiter told me about five years ago that he didn't want to waste his time recommending an individual to fill a NED opening unless that person served as a CEO or was recently retired as a CEO. At that time, the representation of women as CEOs was small, so only a handful of opportunities would have existed. A Chief Financial Officer was not considered to be a viable candidate to serve on the board.

The world has changed recently in response to new demands for people with financial acumen. Plus, special experiences with technology, outsourcing or other strategic initiatives are often desirable for board positions today. Wise companies expanding the functional expertise required for NED positions increases the percentage of women's representation on company boards.

A second reason may be that some women perceive that the risks outweigh the benefits of serving as a board member. To these people, the exposure to lawsuits for a decline in share price or for ethical problems may not be worth the headache. But, potential liabilities can be minimized through due diligence. Ask the auditors, the other board members, and suppliers or customers about the company. Read financial reports and other publicly available information. After your due diligence, you may realize much of the risk is offset by D&O (Directors and Officers) insurance. The only risk I am never willing to assume is attributable to shaky management that would expose me to reputational risk. Most other risks can be managed or projected.

When An NED Position Works Best

The benefits of serving on a board include the opportunity to work with bright people and make a difference to the future. Board members and high-level executives bring incredible experiences to the board room. They can help you develop a broader perspective and better decision-making abilities. By serving on a board, you are investing in your future. Your emphasis is on strategic thinking and learning more about issues that confront CEOs. Your role is not to manage, but to be a thoughtful sounding board for the CEO and to exercise sound financial judgment.