How To Prepare Board Of Directors | Onboarding New Board Members

How to Prepare Your Board of Directors

The Importance of Onboarding New Board Members and Simplifying Board Administration.

In advance of recruiting an independent board of directors, the company will need to develop a board of director onboarding program and establish (or refresh) its Director and Officer’s (D&O) insurance policy. Many factors impact the latter and are beyond the scope of this article. Reaching out to a qualified business insurance broker is a good starting point as well as leveraging online resources.

Onboarding programs serve to formally introduce new board members to the company. They require upfront preparation and are important to making a good “first impression,” and ensuring new board members come up to speed as quickly as possible, which is relevant given the investment the company has made to establish the board of directors.

The scope of any onboarding programs is a function of the business complexity. Any program should include a visit to the company’s major operations, personal visits with the management team, an introduction to the company’s products and services, meetings with company auditors, legal counsel, lenders and major investors especially if the last group wasn’t included in the initial interview process. Onboarding materials should be made available online and include board of director guidelines, charter, by-laws, articles of incorporation, the company’s mission statement, historical financial statements, strategic plan, resumes of fellow board members, minutes of recent board of director meetings, board and committee charters, planners and calendars, and industry metrics.

Other administrative items to consider when forming an independent board of directors, include using online board book applications where the business posts all presentation slides in advance for pre-reading. There are a number of very good electronic applications that simplify this task. Minimize board scheduling conflicts by implementing a “rolling” 12-month board of director meeting calendar and planner. You’ll be amazed at how this reduces wasted time reconciling conflicts. Simplify board member compensation by eliminating meeting fees and including them in a single quarterly payment made in arrears. It reduces administrative tracking and its associated costs. If you think board of director meeting fees are needed to get board members to show up then you have attracted the wrong people. Board members can’t fulfill their obligations if absent. Set the attendance expectations up front and do not tolerate board members who aren’t prepared, arrive late or miss scheduled board of director meetings. Telephonic participation in lieu of attendance needs to be managed carefully too. Add a premium to base board compensation for committee chair assignments because of the increase in responsibility and work load.

Part three summarizes the importance of assembling a thoughtful board of director onboarding program and some cost saving ideas to simplify board administration. It is intended to provide the chairman of the board ideas on what they might include in any onboarding program, so new board members are prepared and more effective from the start. Part four will discuss the role of board of director committees, and the importance they play in fulfilling corporate governance.

Mark Richards is the retired Chairman and CEO of Appvion, Inc. headquartered in Appleton, WI.

Mark is now President of Meade Street Advisors, LLC a board governance, executive coaching, and strategic planning consulting business headquartered in Fort Lauderdale, FL.