The Importance of Onboarding your Directors

Last month’s blog—Creating a High-Impact Board: How to Find the Proper Blend of Competencies, Perspectives and Experience—discussed the importance of defining the skill sets needed within your board and how to go about finding the right people to fit those needs. Once you’ve identified your team of directors, a formal onboarding process will ensure that they provide value to the organization from the outset. Without a formal onboarding process, it can take years for new directors to add significant value to your board – representing a significant waste of both time and dollars.

Unfortunately, it is common for companies in our industry to leave “onboarding” up to the individual director. In a recent study of governance practices at large E&C firms, only 34% of respondents indicated they utilize a formal onboarding process. One industry board member shared, “It was more bringing him in and spending time with him and giving him materials he asked for in our reviews so he was educated. They shared all the financials and things like that with him.” This lack of formal process leaves new directors on their own to figure out the ins and outs of the organization and to find areas where they can add value. Here are some areas you can include in your company’s onboarding process, with clarity around understanding the organization and clarifying roles and responsibilities for new directors.

Organizational Onboarding

The goal of organizational onboarding is to get new directors up to speed on the company’s business side, including current challenges, areas of opportunity, key risks, strengths, company culture and the business priorities/goals that align with its overarching strategy and vision. Here are a few key topics to cover during the organizational onboarding process:

1. History - New directors must understand when and why the company was founded and how it has developed over time. This creates a big-picture perspective regarding the organization’s current mission, purpose, services, strengths and needs. Materials may include a brief overview of history and facts about the organization, newsletters, pertinent brochures and articles of incorporation. Oftentimes, a long-tenured employee is tapped to share “back when” stories that capture first-person insights as to how the business transitioned from surviving to thriving.
2. Financials - The CEO, CFO or controller should carve out time to review recent financials with the new board member (which could include a brief overview on how to read/understand financial statements, if needed). In addition, new directors should gain an understanding of the board’s role in the annual business planning process and how the company conducts financial audits.
3. Organizational Structure - The onboarding process should include a thorough overview of the organizational chart, Bylaws/Shareholder Agreement, a brief introduction to key staff members as well as a review of current succession plans. It should also include all information pertinent to the board itself (i.e., charter, committee structure/roles, briefing books and minutes from the last couple of board meetings, etc).
4. Strategy - New directors should receive the most current strategic plan and organizational goals to understand the company’s go-to-market plans. This may include information on customer needs, growth targets, emerging trends and an overview of the competitive landscape.
5. Facility and/or Jobsite Visits – Using facility or job site visits to show new directors what the organization does, who is doing what, and how it is done can give incredible context to an incoming director. Utilizing key staff (other than the executive officers of the firm) to conduct director on-site visits allows a new director to ask questions and get a different perspective on the business and its current state.
6. Clients – By meeting clients, new board members can begin adding value even before their initial board meeting takes place. In our experience, a wisely selected director sends the message to a client that the business is taking the challenge of meeting (or exceeding) its expectations seriously. These clients leave the interaction with a new director even more committed to working with the firm in the future. And the new board member can ask the most basic of questions, gaining valuable insights into the client’s perception of the business and how they are currently being treated. Casual, social settings are ideal for this initial client experience; similarly, receptions can also be conducive to meaningful dialogue.

Roles and Responsibilities

While formal organizational onboarding is critical for external directors, it takes a somewhat different form for new internal directors. As one CEO stated: “Internal directors need to understand the differences between their role on the management team and their role as directors. Take time to talk through how these roles differ.” Oftentimes, this role differentiation is aided by formal director training. Serving as a senior management team member requires different competencies and techniques than serving as a member of a corporate board of directors – the former follows the cadence of see-think-do while the latter demands a see-think-ask mindset. Consequently, an internal director who hasn’t mastered this shift of perspective runs the risk of becoming more of a problem than a solution.

In its simplest form, a board of directors’ goal is to be a high-performing team. It is critical for all directors to understand the dynamics of the team and their roles on that team. This conversation includes discussion around the responsibilities and expectations of the new position. Here are some factors the board chair should cover with new directors during the onboarding process:

1. Roles, responsibilities and expectations of all directors.
2. A discussion around the vision, purpose and purview of the board.
3. Clarification of the difference in roles for internal directors to ensure they are engaging with the proper perspective.
4. Agreements on how directors interact and communicate with each other and the management team (given that boards tackle varied and sensitive topics, which requires an environment of openness and trust at the deepest levels).

“Talking about being absolutely honest and open with each other. Too often what happen[s]…is that someone might be sitting there thinking that's really kind of a dumb decision, but let him do it, it's in his region or whatever, and not voicing that sort of thing. So saying that we have to have this absolute trust that whatever we say in the room, we'll respect it, and this trust in each other.”

- E&C Industry board member

Onboarding shouldn’t start at the first board meeting. Setting up new directors for success starts with preparing them for success prior to their ever stepping into the boardroom. There is no one-size-fits-all approach to onboarding; it could happen through a formal orientation session, recommended readings in a briefing book or one-on-one meetings with the key individuals in the organization. Taking time upfront to onboard accelerates the learning curve, inspires engagement and can make or break the level of meaningful contributions from new directors.