Times Have Changed – Have You Prepared Your New Board Member

The world has changed significantly over the past couple years.  Responding to the pandemic, increasing social equity, improving corporate transparency, remote working and economic unpredictability have challenged even the most experienced Board of Directors – both private and public.  Board relations and interactions have become more complicated with the restrictions in corporate travel, social distancing, and health and safety precautions, altering how we interact. While virtual meetings have helped keep business moving, they have limitations. They restrict conversations boards can have with company executives, limit interactive dialogue and stunt the relationship building process. Overall, they are impacting board dynamics and their effectiveness, which is critical for successful board of directors. 

 The impact of corporate and societal dynamics is compounded by the influx of first-time board members due to generational and diversity shifts taking place on boards. Our firm regularly consults with board of directors and conducts board assessments and evaluations, and we are noticing that many new and seasoned board members are silently struggling to adapt. 

As new board members are onboarded in 2022 and 2023, board expectations will become more unpredictable and demanding. There is no immediate end in sight for remote interactions and governance charters will ebb and flow, therefore boards must adapt, better prepare, and raise their game to get the most from their newest members.

Onboarding is critical for each board members success. And the process is not new. It has been done for 50 years…but hasn’t changed for 50 years. This is one of the most critical steps for ensuring their success, so it raises the question: Why are boards not adapting the onboarding process with the changing times? 

What has worked in the past is no longer enough, and board members have told us they’re struggling to get up to speed quickly in this virtual, remote world we live in today.   They are struggling to build their understanding over business, ensure alignment with the shareholders they represent, and establish their voice within the board.  

Below are some suggestions and tips for instilling confidence, a smooth onboarding process and a successful tenure for today’s board members. 

Recognize the Shift in Board Dynamics
Among the most significant challenges is that new board members are often first timers and don’t know each other. In 2021, 159 first-time directors were added to S&P 500 boards. Just over one-third—35 percent—of directors appointed to public company boards in 2021 were first timers. 

About half of private boards—48 percent—added new members last year. Initial public offerings nearly doubled in 2021 over any prior year, requiring the establishment of entirely new boards. While almost 90 percent of existing public company directors were male, 37 percent of board member adds in 2021 were women. 

What’s more, the average age of a public company director is 62. While COVID has encouraged board member stability, we are predicting—and more importantly preparing—our clients for a significant retirement off boards soon. The number of directors new to boards is likely to increase, further driving the need for effective onboarding strategies. Even the most competent executive can feel uncertain in a new space, and there needs to be more time and thoughtfulness to the onboarding process.  Given the new terrain such as cyber security, ESG, digital technology and demographic shifts in consumers, long-term board members will be replaced with fresh, new-thinking talent.

Ultimately, the goals in the first year of a new director haven’t changed. These include learning the business strategy, financials, capabilities and management team, and understanding the board and role requirements and expectations. Most boards are succeeding in these areas. 

However, many boards struggle with sharing information on the external and operating factors impacting the business, encouraging the new director to be comfortable and contribute as soon as possible, inclusion of new thinking and fresh perspectives, and creating a rewarding experience for the director and the company shareholders. 

Not All Board Members Should Be Onboarded Alike
Typically, boards onboard everybody the same. Equal onboarding may seem like a best practice, but all new board members do not have equal experience. We need to understand where they’re coming from and their previous board experience to know how to best customize their onboarding process.  

While boards are good at orienting the new board member around the board charters, the company, and the strategy documents, they need to look beyond an internal focus. To encourage and support independent thought, boards need to provide macroeconomic information, geopolitical developments and even technology trends. Directors can draw on the outside data to shape their independent opinions on how the board can support the organization’s goals.  First-time board members will need assistance on board governance and protocols.

Board Members Need Mentors and Support
Interpersonal relationships are critical to board success. Schedule one-on-ones with each board member, not just the board chair. Embrace 50/50 meetings, dedicating half of the time for boards to get to know each other and discuss shared backgrounds and bios. The other half can be dedicated to the board’s role, business challenges and board business. 

As the number of new directors increases, celebrate their involvement. Assign a board member mentor and make it an opportunity to develop the skills needed for successful board contributions. We have found that many boards are concerned they will embarrass the new member by pointing out their lack of experience, but we have found that this is rarely the case. 

Also, consider connecting new directors with a board member outside of your board. The outside source can provide valuable, independent insight, which can be particularly useful when increasing diversity on boards.  

Provide Coaching for New Board Members
First-time directors and even experienced board members welcome development opportunities. There are a lot of courses and training that are often overlooked. Provide continuous feedback and coaching throughout a board member’s term.  

The board chair and nominating and governing committee chairs should plan to meet with the new members at least once per quarter and before and after board meetings to debrief the discussion and provide feedback.  A best practice we have observed is to provide an informal 360 feedback assessment to a board member following their one-year anniversary to ensure they are getting the necessary insights on their contributions to the board.  These are high ranking executives by the way—they can handle it!

Discuss Board Dynamics
Every board has its own dynamics, so address them. Talk about how the board operates, the dynamics, and how and when to speak up. In closed executive sessions before and following the board meetings, discuss how the board should engage and ultimately discuss ‘how did we do?’  New members need to understand how and where they should play an early role. Periodic board assessments help uncover the effectiveness of the board dynamics and identify how the new directors are ramping up.

As onboarding strategies shift, all directors must become very familiar with the onboarding process with new members.  Everyone has a role.  Onboarding strategies should be reviewed in the nomination and governance committee charters then presented to the full board, so everyone understands the critical role each person plays in every board member’s success and contribution. If boards want to get the most out of every new board member, they must adapt to the changing times.

Written by Dan Hawkins.

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