Exploring Paths to the Boardroom: Understanding Corporate Boards and Governance
Author: Juliet C. Hart
Contributor: Phyllis Feeney
On Thursday, 8 October 2020, HBA Central New Jersey hosted: Exploring Corporate Boards and Governance, this is the fifth session of a six-part financial series event.
Event five and six focused on the need for women on boards and the journey to becoming a board member. Attendees came to empower themselves by discovering how corporate boards work, their importance in various types of companies and what skills they need to become board ready.
Doug Chia, president of Soundboard Governance LLC, started with a presentation on board governance 101. Public corporations are required to form a board of directors to act as strategic advisors and provide financial and compliance oversight. The boards are very process-oriented, obligated to document the board’s activities. Typical public companies have boards with 9-12 people, typically not employees of the company and most commonly are retired CEOs or leaders in a particular expertise. Private and not-for-profit board of directors serve in an advisory capacity and non-profits may be comprised of all kinds of members and is usually a “working” board.
For corporations, the board typically serves as counsel for the CEO to bounce ideas off of, but also have the important role of hiring and firing the CEO when necessary to appropriately serve the company’s needs. The board of directors have accountability to the company’s customers, communities, employees and shareholders.
At any given time, the agenda for boards can cover a range of topics, such as but not limited to, mergers and acquisitions, supply chain, COVID-19, cybersecurity, diversity & inclusion, shareholder activism, environmental, social and governance (ESG), etc…
Following the presentation, the panelists fielded a series of questions:
How did you join a board? Why did you join a board?
The panelists ranged from having financial experience as a CFO to having global commercial experience and/or legal expertise. Each person was recruited mainly because of their balance of experience and expertise and how they filled a need on the board, mostly because their networks had referred them. One panelist shared a story about giving a presentation to an elite organization that leads to others seeking her experience.
What is it like to be a board member?
Judy explained that it is a continuous balancing act of being politically savvy and understanding your role. As a board member, you are brought in as an advisor, not to manage the operations. Adele seconded this comment that being so used to driving an organization, beware not to jump in to actively help. This is important to be conscious of during the interview process for a board role.
How is it different being on a not-for-profit board?
Anne shared that understanding the roles in a not-for-profit is important as the governance is not as clear as a corporate board. Often coming in as a professional you bring in the ability to help clarify process and structure. Being on a not-for-profit board can be rewarding and help build personal connections.
What challenges and dynamics do boards face?
Bernadette explained that challenges can be varied whether there’s a large transaction going on, the company is going through operational challenges, or a sudden crisis occurs, in that way the board has to be ready and available at any instant.
Adele shared that she actually been able to leverage her experience in pharma into other highly regulated industries – aerospace/semiconductors. She reinforced that you never know what issues might come up. But make sure that you love the work and are passionate about it because of the potential time commitment.
Doug reiterated not to take on a board role just because it is an honor because it is a lot of work and responsibility.
What is the experience of women being on boards?
Judy acknowledged that she has commonly been the “only” woman in most of her roles. She suggested looking for organizations that have had women previously pave the way to have a role model to look up to. Also, when companies are adding directors hopefully, they add two to three at the same time so that they can onboard as a group to ask questions.
Anne mentioned that a good entry point is with emerging growth/life sciences companies as they are going public. She definitely felt that she underestimated the prevailing culture to not want to shift and adopt new ideas. Understanding the personal/professional relationships of everyone on the board (in particular as related to the CEO) is important to ensure that your voice will be respected.
What are the career considerations to position yourself for a future board role?
Comments from the panelists made sure that the functional skills that you bring are high quality, understand the day-to-day operations of the company but also how it all comes together from the company’s point of view, strive to get P&L experience (brand, geography), actively network, look at the profiles of the people on boards and get coaching and feedback to develop your skills.
After the panel discussion, the panelists were broken into different rooms and had the opportunity to chat with audience members. The time with the panelists just flew right by.
Sheila Frame, president of HBA Central New Jersey, provided her closing remarks about the event. Being very passionate about getting women into board seats, she recommended people in mid-career to consider are they fairly compensated with stock options, do you understand the P&L and how money is made in the company? Consider becoming an advisor for non-profits as a stepping stone, and look for corporate support. In general, foster and encourage those debates of diversity and learn how to ask the right questions that are not threatening but asking for everyone to be elevated.