For any new director, a learning curve comes with the territory. However, just how steep that learning curve is, and how quickly a new director is able to contribute meaningfully to the work of the board and its committees, can hinge directly on the quality of the induction process.
Understanding the business – its operations, strategies, risks, competitive landscape, and management team – as well as the responsibilities and culture of the board and its committees takes time.
But a structured induction program, including essential information and briefing materials, quality discussions with key people, and a “roadmap” for getting up to speed, can greatly accelerate a new non-executive director's integration and contribution to the board’s work.
Directors joining their first board face the added challenge of understanding the unique role of a non- executive director and how it differs from that of management in helping to oversee and guide the business forward.
Formal induction programs help ensure that new board members understand their responsibilities, current issues, and the circumstances of the organization. However, the on-boarding needs for new board members will vary from director to director depending on a number of factors, including the director's background and experience, and the role the director is expected to play on the board and board committees. As a result, a new member should be prepared to take responsibility for their induction program, working with management and others to determine how best to get up to speed and build a strong foundation for informed oversight.
Below, we discuss a number of things for new directors to consider as part of an overall on-boarding framework, including:
Ultimately, a robust on-boarding process should help position a new director to engage in a healthy ongoing dialogue with management, fellow directors, and others with insights into the company and the business environment in which it operates.
Information about the company:
Information about the board and its committees:
Who participates in the initial orientation session will vary, depending on how the organization’s orientation process is structured, e.g., whether the initial orientation is viewed as the first step in a more lengthy process, or whether it is viewed as a more comprehensive orientation session. Depending on the approach, only a few executives might participate in the initial orientation session – e.g., the CEO, CFO, and Company Secretary – or a number of others might participate as well, including perhaps each member of the senior management, as well as key subject matter experts.
Regardless of whether it is part of a formal or structured orientation process, a new board member will want to have one-on-one discussions with a number of key leaders of the business to gain a better understanding of the organization – the culture, strategy, key risks, strengths, areas of concern – and to get to know the leaders outside of the formality of the boardroom.
Initially, it may be helpful to get the “lay of the land” by meeting separately with the chairman of the board, senior independent director and the Company Secretary – each of whom can be valuable sources of information and insight. What are the hot-button issues facing the organization? What issues have management and the board been spending the most time on? What governance processes work well, or not so well? What is the culture of the company – and of the board?
The Company Secretary can provide information about the board from a legal and process point of view, including the committee structure:
In the weeks and months following the initial orientation session, a new board member may also want to meet one-on-one with other leaders in the business: CEO; CFO; CRO (or equivalent); CIO and CISO (or equivalent); heads of sales, operations, marketing and HR; to get their views on a number of key company-wide issues, including:
The business leaders also will have important insights to offer on issues that are specific to their areas of focus and responsibility. In section 5, below, we have identified possible issues to explore.
Board members can also get a good understanding of the organization through both social media and talking to people beyond the board. Get out of the head office and visit the factories, stores and operations, as applicable to the organization.
A good on-boarding process – which is key to getting a new board member up to speed and in a position to contribute to the work of the board – is not a “one size fits all” process, and may vary considerably depending on the size of the organization and on the background, experience, and areas of interest of the new director.
While management obviously plays a key role in shaping the on-boarding program, every new board member needs to take charge of his or her own on-boarding in order to make sure that it is properly tailored and focused.
Ultimately, a good on-boarding process should provide information about the company that will enable a director to add value based on their unique experience and perspective.
Education, or professional development, should never stop. Continually seeking out relevant information (from internal and external sources) and a deeper understanding of the business, the competitive landscape, and emerging opportunities and threats, will be essential to providing effective oversight and bringing insight and foresight to the boardroom dialogue.
CFO /Financial Controller
CIO and CISO (or equivalent role)
Chief HR Officer
Chief Marketing/Sales Officers
KPMG’s Board Leadership Center offers non-executive and executive board members and those working closely with them (including CROs and Heads of Internal Audit) a place within a community of board-level peers and access to topical seminars and ‘lunch and learn’ Board Academy sessions, invaluable resources and thought leadership, and lively and engaging networking opportunities.