How to Add More Value as a Board Member

By Chris Cook

In my experience as a CFO who both advises and sits on boards, I have been fortunate to witness some excellent board members “in action”. Being a director is an important responsibility but often board members receive scant education and training for this key role.

FLG has hosted two insightful roundtables “Excellence in Board Leadership: Navigating Complex Challenges” and “Managing Challenging Board Behavior” which I encourage everyone to view. These dive into real-world board situations and issues and discuss how board directors can take action to address them.

So how can you as a board director best set yourself up for success?

Here are my four recommendations:

• Ensure you have the right profile to be a board director.
• Understand the director’s role.
• Build your own personal board member “brand”.
• Take steps to maximize your effectiveness.

Ensure You Have the Right Profile to be a Board Director

Board members are not born, they are made. But being a successful director starts with having the right professional mindset, skills, capabilities, and potential.

Strategic versus Operational

Board members need to be highly strategic (versus more “in the weeds”) in terms of their mindset and framework for problem solving. They should consider multiple scenarios to achieve organizational objectives, and delve into where each might lead, rather than getting involved at a detailed operational level.

Accountable – Independent – Confidential

All directors need to be willing to be 100% accountable for their decisions and actions as a board member. They must always take their board fiduciary responsibilities seriously and must disclose any conflicts of interest immediately. They also must be willing to hold the management team accountable for their actions and willing to challenge the C-Suite when appropriate. Bringing an independent perspective to the review of performance couldn’t be more important for a board member. Directors must be able to keep confidential all matters discussed related to the company. Integrity couldn’t be more critical when it comes to being a good director.

Strong Capabilities and Work Ethic

Most board members are brought on a board because they bring unique capabilities, experience, or specialty knowledge. They are part of a collage of talent which complements the other board directors individually and collectively. They are, by definition, highly competent in their respective fields of expertise and bring their high standards for performance into their board roles. They are expected to get up to speed rapidly on the nuances of the business, competition, market dynamics etc. Board members must be committed participants, willing to take the time to prepare for meetings, problem solve collaboratively and negotiate when it comes to [no such word] coming to consensus around solutions.

An illustrative story from my board experience: I joined a board at which the Finance Committee had not been receiving regular financial reporting. In fact, the Finance Committee had not even been meeting regularly. As the board member with a finance background, I immediately called a meeting with the CEO and head of finance and started asking relevant questions. I discovered that the company had less than 2 months of cash runway. Neither the officers or directors knew this important fact. As a board director, I jumped into gear. Fortunately, we were able to get extensions on several loans that were nearing their terms as well as bring in new funding while quickly right-sizing expenses. We remained cash positive and reinstituted regular financial reporting and Finance Committee meetings.

A Good Cultural Fit

Finally, board members need to have a passion for the mission of the business or organization. Directors must also be a seamless addition to the board’s culture. They also should contribute positively to the culture by fostering an environment of trust, listening respectfully to their colleagues and the management team, even when they wholeheartedly disagree with them. Their ability to clearly articulate and communicate their perspective (especially if they have to be a contrarian) within the broader company ecosystem is what makes great board members stand out and make a positive impact. And great board members are often great mentors. They are supportive and encouraging to their fellow directors and the C-Suite.

Another quick story here. I joined a large Series E privately held, midcap company board comprised mostly of the company’s founders and investors. I saw firsthand how board members at the company worked actively to be both supportive of management but also hold the team accountable for specific, agreed upon metrics. They always asked great questions in the board meetings and pushed back when they needed to on management’s optimistic scenarios. Company forecasts became much more accurate as a result of this board approach and the company’s management to forecast also improved immeasurably.

Understand the Role of Board Director

Aspiring and current Board directors should also be very clear about the roles of a board member, Committee member or Committee Chair on a particular board. First and foremost, it is the obligation of every board member to:

• Ensure the company operates legally and is managed with integrity.
• Maintain the health of the organization or company by evaluating strategic scenarios, competitive threats, upside and downside scenarios.
• Help accelerate the business by employing best practices, creating value, and maximizing profitability and performance.
• Provide organizational oversight to manage the various risks facing the entity and review a full continuum of options for risk mitigation, including crisis management.
• Ensure the company has the full suite of insurance policies and protections (D&O, Property, E&O, Cybersecurity, Business Interruption, Employment Liability).

Build a Strong Board Director “Personal Brand” 

Just as every board member is invited onto a board for their specific experience and capabilities, board members should take proactive steps to build their own “brands” once they join a board. This means clearly understanding your value proposition and using this to advance the organization’s objectives. This includes any domain expertise in the industry sector, your technical skillset (finance, marketing, corporate development, sales, etc.) and then a softer set of personal and professional attributes. You should ask yourself key questions such as “What types of problems are you good at solving? How do you get things done? How do you work with and leverage others? What do you need to be you at your best?”. In addition to knowing what you and your personal brand stand for (e.g., your brand “claims”), you should also carefully research the board’s stakeholders (investors/shareholders, employees, customers). These stakeholders form your core audience who will ultimately measure your success (or failure) as a board member.

Take Steps to Maximize Your Effectiveness

Being a good board member is never “mission accomplished”. All of us can always improve. All board members should actively seek to maximize their effectiveness over time. I have three main tips here.

Be Clear About the Company’s Appetite for Risk

Good board members match the risk “culture” at the organization with the company’s appetite for risk. Is the company more, or less, risk averse? This will significantly impact how the board sets up the company’s risk management program, a key oversight function of this body. And while risk appetites may differ between different areas of risk (financial, reputational, product, cyber, etc.), effective board members understand this and are able to balance the degree of risk tolerance at the business with the right level of risk identification and management strategies by area.

Always Look Beyond Today

The best board directors are highly strategic and inspirational to others on the board. They always look beyond today, towards the future and what could be possible tomorrow if the company operated differently. They don’t over engage with management. They balance longer term objectives appropriately against the need for immediate actions focused on near-term challenges. And they embrace a range of board member perspectives and work through opposing viewpoints carefully and thoughtfully.

Be Prepared to Stand Alone

As a director, you must be strong enough to occasionally stand alone with your point of view about a given issue facing the organization. When everyone else is in an opposing camp, you must not let this squelch your perspective or voice. A good board Chair will make sure your perspective enriches the overall discussion about next steps and is leveraged by the board to ultimately create the best result.

If your company needs board advisory support in finance (Finance, Audit, Compensation or Governance Committee support), do give us a call at FLG Partners. We have deep experience providing board consultation work to private and public company boards as well as to some nonprofits. Get in touch!