Secrets of successful induction for directors

Don’t ‘Throw your new director to the wolves; a successful induction builds a successful board

Never assume

Never assume that someone knows how to be a director. Never assume that they know how your board works best, or even what skills, knowledge, and abilities your board wants from them.

Every board is unique and so is every different director that may join your board. It follows, as a logical progression, that every induction program should also be unique. Build the program based on the specific needs and desires of your board, company and new director.

Induction should be a two-way process where the board learns more about the new director and the new director learns more about the board, the other directors, and the company. This is imperative even if the recruitment process has been carried out with diligence and exhaustive attention to detail. Not every director will be involved in the recruitment process, and the CEO and senior executive team members will not have had much opportunity to become familiar with the new board member.

Involve others

Sometimes induction requires the involvement of major shareholders and other influential stakeholders. Don’t limit your process by following a set program that was written by a ‘plain vanilla’ academic for a ‘plain vanilla’ company. Embrace the full richness of your board’s environment to ensure that any recruit can rapidly assimilate knowledge and build relationships so that they are confident and effective from the moment they start in their role.

What to include

Here is my preferred process for building a strong connection between a new director and the board:

Start with a ‘standard pack’ of information. This pack might include (but should not be limited to):

· A copy of the constitution or enabling legislation for government-owned companies

· The most recent two or three annual reports

· The minutes of the last two AGMs and any other shareholder meetings in the prior two years

· The minutes and agendas of the past year’s board meetings

· The full board papers/pack for the last three meetings

· A copy of the board charter and the charter or terms of reference for any board committees

· Contact details and brief CVs for each of the other directors and the senior management team members

· The current approved budget and strategic plan (unless already included in one of the board packs)

· The most recent CEO performance evaluation (unless already included in one of the board packs)

· The most recent board performance evaluation and any action plans for improving performance that arose from it (unless already included in one of the board packs)

· An organisation chart showing subsidiaries and operations with the name of the manager responsible

· The most recent competitor analysis (unless already included in the strategic plan)

· Information on correct use of company letterhead, business cards, email addresses, etc.

· Travel and expense reimbursement processes

· Key policies such as the code of conduct, share trading, AML/CTF, conflict of interest, bullying and harassment, etc.

Meeting not just reading

Provide a schedule of meetings so that the new director can spend time with each of the CEO’s direct reports, the CEO, the Company Secretary and each of the other directors. Start this with a long meeting between the new director and chair to discuss the board’s key concerns, culture, operating modes, etc. A new directorship is similar to a ‘journey of a thousand coffees’. It requires understanding people at a deeper level than can be achieved by merely reading their CV or answering a few of their questions during an interview.

Remember that, given the joint and several nature of the board’s responsibilities, each director must understand and trust the others.

Create a schedule of learning experiences; this might include:

· visits to sites and operations

· attendance at an industry conference

· for novice directors — a course in governance from a reputable provider

· competitor visits

· client and supplier visits

· a technical session on how to use the board portal or other software

· a session with the auditor

· formal (paid professional) or informal (board buddy) mentoring

Follow-up

Complete your induction with a follow up meeting between the new director and chair so that any surprises can be discussed, and insights shared. Fresh eyes will often see things that the existing directors have become accustomed to. Remember that the induction is a two-way process and the new director can teach the board and company as they teach him or her.

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Julie works with boards and directors to improve the effectiveness of their governance and performance of their company.

Julie Garland McLellan is a consultant who works with boards and directors to give them the practical skills they need to build better businesses. She is famous for her practical and pragmatic approach to the real problems that face boards and directors and for her ability to bring sanity and solutions to even the most vexed boardroom.

She has first-hand experience on 18 boards across three continents — including listed, private, government, and not-for-profit boards — and has helped boards to lead successful organisations for over 22 years. Julie has written and facilitated director education for leading governance institutions, including the Australian Institute of Company Directors, The Governance Institute of Australia, The National Association of Corporate Directors (USA), The Taiwan Corporate Governance Association, etc.

Julie is the author of six books for directors and is publisher of The Director’s Dilemma newsletter.