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Getting on to Boards of Management

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November 02, 2015
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A Board of Management is the governing entity of a company, however the term is often  being used for government, universities and not-for-profit organisations.  Local governments and university boards have traditionally called themselves Councils, whereas the Commonwealth and State Governments call their boards Parliaments, and not-for-profit organisations call them Committees.  Independent on its name, the terms Board, Board of Directors, or Board of Management are being the norm.

This governing entity has four key functions:   ensuring legislative compliance of the organisation, establishing a governance framework to guide appropriate behaviour, setting the strategic direction of the organisation, and the selection, appointment and ongoing performance management of the chief executive officer.

A Board Director (Councillor or Committee Member) may either be an executive Director, which means they also have a role in the organisation, or a non-executive Director, which means they only reside on the Board.  This explains the term Chief Executive Director, as they are the most senior of the people that have a role in the organisation.

A Board Director cannot represent another organisation, rather they must act independently and in the best interests of the organisation and its members / shareholders. This means that if a person was nominated to be on a Board of Management, such as the case of a parent entity placing a person on a subsidiary business’ board, they are actually referred to as a Nominee Director and not a Representative Director. In fact, if a Board Director is being unduly guided by an external company or individual, in the event that personal liability arises, they too may be held liable and would be referred to as a Shadow Director. A Shadow Director is not a good position, it suggests they are controlling or significantly influencing a Board Director like a puppeteer pulls the strings of a puppet.

Being a Board Director comes with personal liability. Basically, if the Board of Management’s inappropriate decisions lead to the demise of the organisation and it can be linked back to those decisions, or where the Board Directors knowingly allow the business to continue to trade insolently, they can be held personally liable, and their personal assets may be at risk.  This is why you need to do your due diligence when going on to a Board, ensuring it is a sound organisation and financially stable.

Many Boards now are approaching recruitment based on skills they need, and they are often referred to as Skills-based Boards.  Having the appropriate coverage of skills is important for a Board of Management, however in general the following elements are attractive in the recruitment process and can be used in positioning yourself for a Board Director role:

  1. Professional Qualifications and Certifications – qualifications like a LLB (Bachelor of Laws) or an accounting qualification, or a CPA or CA accounting certification are favourable due to the financial and legal aspects to organisations. Whilst law and accounting is often highly sought after, it will depend on the skills the Board of Management is looking for, such as an architecture firm may like to have a structural engineer on the Board;
  2. Personal Profile and Network – having a high profile yourself and / or a wide personal network can give positive exposure to the Board and organisation, and may enable the business to access to the network of a Board Director. This is often particularly important when the organisation is fundraising;
  3. Board Experience – having extensive experience on Boards or in senior management roles is favourable as it shows competency in dealing with board and management matters. Many people have to gain experience through volunteering on not-for-profit boards before they tend to become paid Board Directors. Public company boards are most difficult to get roles on over private companies or not-for-profit entities;
  4. Membership to Professional Associations – as Board Directors need ongoing professional development and knowledge of legislation changes and other factors impacted businesses, it is wise to demonstrate you are serious about the role and are a member of a board director professional body, such as the Australian Institute of Company Directors (Australia), National Association of Corporate Directors (USA), or the Institute of Directors (UK);
  5. Executive Management Experience – having extensive management experience and particularly having been a Chief Executive Officer is very helpful in a Board role, as the Board effectively supports and guides the CEO. This experience also gives you understanding of wider business issues;
  6. Company Director-specific Qualifications or Training – many of the professional associations are now offering qualifications or board director training, such as the Australian Institute of Company Directors’ Diploma of Company Directorship. This suggests the person understands the role and is aware of the obligations of a Board of Management and is well prepared to take on a role; and
  7. Shareholding Ownership – private companies often have the owners on the Board of Management, and sometimes if an individual or business owns enough shares in an entity, they may be offered or require a position on the Board of Management.

Being on a Board of Management can be a great way to contribute to the organisation and the shareholders or members it serves, to expand your own business knowledge and even gain income.  Board Directors may receive Board Director fees, and a few people even make a living on being a non-executive Board Director.

The important thing is to position yourself to be attractive to offers from Boards of Management, to build professional networks that enable you to be invited or referred to positions, and to enable yourself to provide the maximum level of value when you are a Board Director.

 

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ABOUT TODD HUTCHISON

Todd Hutchison is a highly experienced professional company director. He completed both the national and international Diploma of Company Directorship, and is a member of the Australian Institute of Company Directors, and the National Association of Corporate Directors.

He is a Fellow of the Australian Institute of Management, Project Management Institute (Australia), International Institute of Project Coaching, and Leadership Western Australia.

He resides on National and international Boards of Management.

His tertiary qualifications cover the areas of engineering, business, contract management, training, coaching and information technology, including a MBA from Deakin University and a Master of Commerce from Curtin University.  He is now completing a PhD and a Bachelor of Laws.

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Todd Hutchison is an international bestselling author, and resides on the Project Management Institute’s international Board of Directors. He has held both General Director and Academic Director roles in university environments, established PMI Registered Training Providers and ASQA Registered Training Organisation entities. In addition to the Business Education Institute, he has worked with the University of Western Australia, Curtin University, Edith Cowan University, Deakin University, Victoria University, Fiji School of Medicine, Polytechnic West, Durack Institute, Australian College of Project Management and the Australian Institute of Management.

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