Understanding Your Role on a Board

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Creative Commons

Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Founder & CEO, Women Get On Board

There are two roles you must play on a Board, one is Oversight and the other is Value-add.  I will highlight both roles with an extract from a chapter that I co-authored with Donna Price in 2008’s Entrepreneurial Effect by James Bowen and Glenn Cheriton, titled Corporate Governance-Directors of Emerging Companies.

(To promote understanding of a director’s role on a board and how to prepare for board opportunities, and as a co-founder of Women Get On Board, I am co-facilitating a series of Getting Board-ready workshops from October to December 2015. Learn more about them here: http://womengetonboard.ca/workshops/.  Hope to see you there!)

The Oversight role on a Board

The primary responsibility of directors is to oversee the management of the business and affairs of a corporation. This is referred to as an oversight duty. As a general matter, a business corporation’s objective in conducting business is to create and increase shareholder value. To this end, in addition to performing an oversight duty, boards also perform a value-added role. Decision-making generally involves developing corporate policy and strategic goals with management and taking actions on specific matters related to those policies and goals. Other matters, such as changes in the charter documents, election of officers, (and other matters referred to above), require board action (and sometimes shareholder action) as a matter of law.

All directors must understand that decision-making and oversight responsibilities come from prescribed standards of duty and conduct.

The corporate statutes impose two principal duties on directors: A fiduciary duty and a duty of care. As fiduciaries, directors have an obligation to act honestly and in good faith with a view to the best interests of the corporation.

As a director, you must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. This is known as the duty of care. In discharging the duty of care, a director must be concerned about process at least as much as, and perhaps more than, the actual decision taken. The duty of care underscores the need to implement corporate governance procedures to guide the board in decision-making. This means that pre-meeting, meeting and post-meeting practices should be oriented to providing the right information within a timeframe that will permit diligent discussion and decision. If a board makes a decision that may be contentious from a business perspective, provided the board gave sufficient thought and consideration to the decisions and were otherwise diligent, it will not normally be criticized. This is sometimes referred to as the “business judgment rule” and generally speaking, courts will not substitute court judgment for the business judgment of the board.

The Value-Add Role on a Board

In the formative years of an emerging company, the director’s role is more often weighted to a value-add role and as the company matures the role becomes more weighted to an oversight role.

Keeping in mind that the overall role of the board is to maximize shareholder value, directors also provide a level of insight, business acumen and personal network that extends beyond the company’s management team. These are some of the components that contribute to a director’s value-added performance.

The collective board should have sufficient industry knowledge and domain expertise (such as technical, operational or governance) in order to add value to board decisions and strategic priorities. Paramount to their duties, directors must select and oversee the CEO and monitor company performance. A value-added board should provide insight, advice and support to the CEO and management on key decisions and issues confronting the emerging company. Caution: “Nose in, Fingers out!” Boards must balance being too engaged in the day-to-day operations, with performing an oversight role.

Please join us for the Getting Board-ready Workshop Series from Women Get On Board 

The purpose of the Getting Board-ready workshop series is to help women gain insights and learn about the skills they need to prepare for board opportunities. These half-day workshops will be facilitated by Corporate Directors, governance and search experts who will provide practical experience to empower women with tools to enhance confidence and courage to lead and serve on boards. http://womengetonboard.ca/workshops/.

Are You Board-ready?

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Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Founder & CEO, Women Get On Board

Getting yourself board-ready is a journey where you need to be realistic in your skills, experience and value you bring to a board. You also need to be mindful that it is a very competitive marketplace. There is an over-supply of qualified corporate directors for a limited supply of available corporate board seats.

So, how do you start your journey to get board-ready so you can compete for a corporate board seat?  The first step is to ask yourself these 10 questions to determine your readiness for leading and serving on a corporate board.

10 Board-Ready Questions

  1. Do you have a minimum of 10 to 15 years of experience in a senior executive role in the public, private, crown or not‐for‐profit sectors?
  2. Are you prepared to commit at least 200 to 300 hours per year to a corporate board role?
  3. Do you have the support of your own Board of Directors and/or senior executives to serve on a board?
  4. Do you have a formal governance certification or designation (C. Dir or ICD.D) from the Directors College or the Institute of Corporate Directors?
  5. Have you ever served on a board, not‐for‐profit or for profit?
  6. Are you a team player that understands the dynamics of boards is one of the most critical components of good governance?
  7. Do you fully understand the role, responsibility and liability of a corporate director?
  8. Do you understand the difference between a board of directors role versus a management role?
  9. Do you have financial acumen—can you read and understand financial statements?
  10. Do you have experience in critical areas in our changing world such as Risk Management, International Markets, M&A, Cyber Security, Digital Media, Big Data, etc.?

If you have determined that you need to begin your journey to get board-ready please consider registering for our Women Get On Board Getting Board-ready workshop series.

The purpose of the Getting Board-ready workshop series is to help women gain insights and learn about the skills they need to prepare for board opportunities. These half-day workshops will be facilitated by corporate directors, governance experts and search experts. They will share their experiences to empower women to become more confident in order to lead and serve on boards.

Getting Board-Ready Workshop Links:

Understanding your role on a Board – http://bit.ly/Workshop1Oct7

How to prepare yourself for Board roles – http://bit.ly/Workshop2Nov4

How to get yourself on a Board – http://bit.ly/Workshop3Dec9

All Three Workshops: http://bit.ly/Workshop1Oct7

Stayed tuned for more Women Get On Board blogs on getting board-ready!