Good boards never assume that someone knows how to be a director. They never assume that someone know how their board works best, or even what skills, knowledge, and abilities the board wants from them.
Every board is unique and so is every director that may join your board. It follows that every induction program should also be unique. Build the program based on the specific needs and desires of your board, company and new director.
Induction should start and continue throughout the recruitment process and for some time after appointment. It is not a ‘one and done’ data dump but serious ongoing education.
To help boards, management teams, and directors who are currently recruiting, or preparing to recruit, new directors we have developed this checklist of questions that may alert you to any gaps in your process or information flow.
The questions below provide comprehensive coverage across:
- Starting the search
- A sound process
- Information for candidates
- Information for appointees
- Ongoing education and development
- Giving back to the next generation
The questions are designed to start you thinking about issues that you may encounter. Your answers are not necessarily good or bad; they should reflect the current and desired state of your personal reputation and relationships with the people who can influence your ability to succeed.
Trust yourself to recognise the most important questions to help you maximise progress and build a valuable director brand.
At the end of the checklist, we have listed some references that you may wish to investigate for additional reading on the topic. We have also included some suggestions for putting into action the ideas that result from considering the checklist.
Starting the search
1. Induction should be a two-way process where the board learns more about the new director and the new director learns more about the board, the other directors, and the company. What information do potential new directors require before they nominate for your board? What channels exist for getting that information to potential directors before they nominate?
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2. Does your board have an up to date skills matrix that guides directors to specify the skills new directors should bring to the board? How does that impact the information provided for this election or solicitation of nominations?
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3. Has the board prepared a standard package of information for giving to potential nominees for the board? Has this information pack been customised to meet the needs of nominees with the desired skills and to deter nominees who lack the requisite skills?
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A sound process
4. Who will provide the information to the candidates?
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5. How will you ensure that the same information is given to all potential new directors and that no candidate is provided with additional advantages through selective briefings or dissemination of information?
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6. What platforms do you expect to use to communicate with your potential directors? How secure and timely are those platforms?
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7. At some point in the process you will move from provision of non sensitive information to highly sensitive confidential information. Have you identified which information for potential new directors is confidential? Do you have a well-drafted confidentiality deed that protects the information from disclosure?
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8. Do you have assurance that confidential information will not be released until after the confidentiality agreement has been enacted?
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9. Is there any information that you want to have returned or destroyed after the end of the process? How will you verify return or secure destruction?
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10. Do you have a process for gathering the consent to act forms (or – better – signed acceptance of the letter of terms of appointment) before the release of information to successful appointees?
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11. Do you need to announce appointments (for example to a regulator or the ASX)? Do you have a process for developing an agreed announcement as the appointment is finalised so that it can be released in a timely fashion? What information do you need to collect from candidates to make your required announcements and disclosures?
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12. Do you want candidates to do anything after appointment to enhance their effectiveness for your board?3 At what point in the process is it appropriate to raise this requirement?
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Information for candidates
13. What information do serious candidates for director roles expect and need?
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14. Can you provide, as a minimum: 1. A copy of the constitution or enabling legislation for government-owned companies, 2. The most recent two or three annual reports, 3. The minutes of the last two AGMs and any other shareholder meetings in the prior two years, 4. Brief CVs for each of the directors and the senior management team members?
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15. What information are your candidates asking for? If there is a mismatch between what your candidates are asking for and what you believe a good candidate should require you will need to ascertain whether your requirements are aligned with the market and/or whether your applicants are up to the standards you deserve in your boardroom.
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16. How much information is publicly available? How much initiative do you want candidates to display in seeking out information from your website and other public sources?
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17. What information is not public and must be protected by a confidentiality agreement?
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18. How will you ensure fairness of access to the information?
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19. If you are recruiting for two very different skillsets (for example a legally qualified director with litigation experience and a director with extensive marketing and consumer advocacy experience), how will you accommodate the very different needs for information that they will have?
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Information for appointees
20. Immediately upon appointment and receipt of the consent to act form or signed letter of acceptance of terms of appointment, can you provide a package of information containing: the minutes and agendas of the past year’s board meetings; the full board papers/pack for the last three meetings, the latest risk review and/or risk framework audit; a copy of the board charter and the charter or terms of reference for any board committees; contact details for each of the other directors and the senior management team members; a schedule for meeting with board members and key management personnel; the current approved budget and strategic plan (unless already included in one of the board packs); the most recent CEO performance evaluation (unless already included in one of the board packs); the most recent board performance evaluation and any action plans for improving performance that arose from it (unless already included in one of the board packs); an organisation chart showing subsidiaries and operations with the name of the manager responsible; the most recent competitor analysis (unless already included in the strategic plan); information on correct use of company letterhead, business cards, email addresses, etc.; travel and expense reimbursement processes; key policies such as the code of conduct, share trading, AML/CTF, conflict of interest, bullying and harassment, etc.; a schedule of the next year of planned board and committee meeting dates with the key agenda items to be covered at each?
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21. What other information may your appointees require?
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22. Who do your appointees need to meet? How will you arrange for them to have meaningful interaction with their new colleagues and appropriate members of the executive team?
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23. Which sites, facilities or venues do they need to visit to get a ‘feel’ for the culture and operations?
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24. Which stakeholders do they need to meet? How will you arrange these meetings? Who should accompany the new appointee?
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25. Should new directors visit your competitors, clients, advisors (especially auditors) or key suppliers? What useful knowledge could they gain?
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Ongoing education and development
26. Induction post appointment is often likened to ‘drinking from a firehose’. It is not the best and most efficient process for knowledge transfer. What are the most important pieces of information that you will wish to reinforce at later dates? How soon after induction will these be re-issued or updated?
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27. What information is best withheld from the initial induction and delivered at a later stage when the new director has gained more familiarity with the company and will be better able to assimilate it?
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28. What recurring education opportunities are presented in your annual business cycle (for example a staff conference or townhall meeting) that would benefit your new directors?
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29. What industry events or conferences will provide education and network enhancements for your new director? Has attendance at these been scheduled?
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30. Do you have a formal mentoring or ‘buddy’ system to support your new directors?
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Giving back to the next generation
31. What knowledge do your current directors have that would be useful for their newer colleagues on the board?
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32. How can you arrange for this information to be transferred?
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33. How can you build an expectation from the very first day of appointment that directors will all work to enhance the knowledge and effectiveness of the board throughout their tenure?
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34. Can you engage with former directors to assist new directors to rapidly understand the organisation’s history and context?
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Taking action
Read the questions and note which ones you can confidently answer. Make a record of any actions that you wish to take to help answer any questions that you were not confident about.
There are no right or wrong answers to these questions. However, there are some that will make you think and that may merit institution of a few new practices to ensure that your board inducts new directors thoroughly and well.
Additional reading and reference sources
Executive appointments and disappointments by John Colvin et al.