Rethinking Director Onboarding
By Susan C. Keating

Why it needs to radically change.

A board process that is far overdue for change in many companies is onboarding, which is increasingly critical today to the effective functioning of both the overall board and its individual directors.

Some companies have very formal onboarding processes for directors, others informal programs, and some practice on-the-job training. Historically, many boards have focused more on orienting new C-level officers rather than ensuring that their new board members are armed with the information needed to hit the ground running.

Companies are becoming increasingly aware that their onboarding processes need to address the challenges of today’s board service, the changing nature of the boardroom, and the competitive realities facing organizations and industries in an ever-changing global market.

Driving the need for a reprioritization of the onboarding process are a number of factors:

 

• The gap between stakeholder demand and what boards can deliver. Each year, we see stakeholder demands of boards growing — for more oversight, more engagement and more involvement in setting strategy. Investors want boards to not miss a beat, even during times of director turnover. Yet 60% of directors see a gap between the expectations placed on boards and the reality of a board’s ability to oversee a company, according to the Global Board of Directors Survey from WomenCorporateDirectors, Spencer Stuart and Harvard researchers.

 

• Board size and CEO involvement. Because boards are smaller than in the past, it is even more important that each board member is up to speed and that the full board comes to each board meeting prepared to make effective decisions impacting the future of the company. The CEO’s involvement in the onboarding process is critical, along with contributions from other board members and C-level managers. Consideration of market forces, current and future strategic directions, corporate risk, technology changes and performance all need to be part of the new member orientation process.

 

• More diversity around the boardroom: As gender, ethnic and age diversity increases on boards, a healthy dose of dissent and complementary skills and backgrounds will be added to board decision-making. Through an effective onboarding process, early in each member’s tenure, the opportunities for informal networking — sharing, learning and building trust with other board members and senior management — are increased, thus leading to a more robust and effective dialogue.

 

• Wide differences in culture from company to company — and board to board: The interpersonal style of the board chair sets the cultural tone in the boardroom. On some boards a more domineering and aggressive chair is appropriate and effective, in others a quiet but deliberate style works. The key for new board members is to understand the unwritten rules and how to navigate effectively within the environment. Whether healthy or even somewhat dysfunctional, the culture of the company and the intra-boardroom dynamics are the forces at work that must be assimilated by the incoming director.

 

• Unprecedented changes in tech, competition, and markets: The pace of technology disruption, the number of competitors crossing industry lines (e.g., Amazon buying Whole Foods, Alibaba launching the full-scale bank Ant Financial and Google entering the driverless car market), increasing trade wars and regulatory changes are just a few issues impacting corporations today. New board members can greatly benefit from receiving historical and current context on the most critical hot issues as part of the onboarding process to help increase their knowledge base quickly.

The current environment offers new opportunities and unique challenges. With a formal onboarding process around content, culture and decision-making dynamics, new directors will be well-positioned to meet the additional demands being placed on them.

In addition to the process for new directors coming on board, boards should also consider ways to continually improve the performance, education and group dynamics for the full board, including those who have served for a while. Forward-thinking boards are embracing this idea — and one approach could involve analyzing the factors that create high-performing senior management teams and applying the same principles to the boardroom.

Boards that do not take a more holistic view of their onboarding processes and operational strategies run the risk of being left behind. 

Susan C. Keating is CEO of WomenCorporateDirectors.

 


Issue: 
2018 Third Quarter

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