You've gotten the offer to join a board, you've done your homework and said yes. Now here's what you need to do before your first meeting
Once you've accepted a board invitation, the company will organize your orientation program. The savviest directors make sure they're learning what they really need to know before they enter the boardroom and frequently make specific requests for information, meetings, and visits to supplement whatever the company has planned. Here are some areas you'll want to think about.
Industry terminology, acronyms, and buzzwords are frequently used in board presentations. These can leave new directors mystified, yet reluctant to ask what they mean when everyone else seems to understand them. To avoid this problem, ask for a short glossary of terms relevant to the company and its industry.
Strategy, Key Issues, and Top People
These are the three most important areas for any new director to learn about right out of the gate. Often the best approach is to spend two days at corporate headquarters meeting one-on-one with senior executives, starting with the chief executive and financial officers and moving through the top ranks. This allows company executives to get to know you before they begin working with you in the boardroom and gives you a chance to learn about the company in a forum where you can more comfortably ask so-called dumb questions.
While you will have met the CEO (and possibly the CFO) during the director recruitment process, this round of meetings has a very different tone. These are aimed at providing you with a deeper understanding of key issues appropriate to someone who is about to pull up a seat at the board table. Your first meeting should be with the CEO to give you an overview of the company and the key issues he/she is facing and typically includes a "deep dive" on corporate strategy. It can be helpful to ask whether there is a recent strategy document that you can either review in advance of this meeting or have the CEO take you through when you get together. Meeting with the CFO provides an opportunity to learn how the numbers are put together and understand key metrics used to gauge performance. A useful exercise for this meeting is having the CFO walk you through the last quarterly financial statement. If you have been asked to serve on the Audit Committee, it's also a good idea to spend some time with the external auditors.
Right at the outset, schedule a follow-up day of meetings with top management six or eight months down the road. By then, you'll be far enough along on the learning curve to ask even more focused questions.
Many companies organize site visits for new directors. If none are planned as part of your orientation, ask for at least one. For example, if the company has two major lines of business, you may want to visit one operation in each sector. If company operations are readily accessible, as in the retail industry, you can design your own site visits simply by visiting stores. Drop by stores of major competitors as well.
One cautionary word on site visits: Staff will sometimes raise budget issues or complain about company policies during your visit. Three new directors on a mine visit found themselves in this situation when the mine manager complained about a $3 million expansion being slashed from his budget. The new directors told him this "seemed like a mistake." As their helicopter lifted off, the mine manager was on the phone with the CEO telling him that he had support for his budget at the board level. Needless to say, the new board members—who had little knowledge about the numerous factors that went into this budget decision—met with an icy reception when they returned to corporate headquarters. The best response is nearly always to suggest that you'll bring such comments back to the CEO—and to do so.
Learning About the Board
Committee charters, governance guidelines, and bylaws tend to be boilerplate but are still worth reviewing. More interesting is to ask for the last board assessment, which should provide insights on how the board perceives its strengths and weaknesses. Another illuminating document is the CEO's last performance assessment.
Your recruitment interviews will have given you an opportunity to meet some board members, but perhaps not all. Try to meet as many of your fellow directors as you can before or shortly after your first board meeting. Begin by asking the chairs of each board committee if you can spend an hour with them—in person or on the phone—to get up to speed on committee issues. For others who don't chair committees, make a point of calling them to say "hello" and or get together in person, if geographically feasible. Taking this initiative demonstrates your desire to work with them as colleagues and to get to know them as people, which can be critical whenever a new member joins an existing team.
This type of learning takes time and effort, which can be demanding on a busy director's schedule. But in today's governance environment the more you learn and the faster you learn is critical. Not only will you be able to contribute more quickly as a board member, you'll feel more confident in knowing what's really going on at the company you've just agreed to help govern.