Confidentiality dictates that “what happens in the boardroom, stays in the boardroom”, even though these secrets are unlikely to compete with most of the things that happen – and stay – in Vegas.
But in the past week, I’ve received a number of queries following two themes. First, whether it is worth taking the Australian Institute of Directors (AICD) company director course; and second, what is good boardroom practice?
To address these queries and hopefully provide some answers, I’ve asked even more questions about the boardroom. Since you most likely already know the answers, the quiz part of this week’s discussion works like this:
First, think of your own answers to the questions. Then, compare your thinking with Strictly Boardroom’ best efforts at answering each one. Finally, ask yourself whether we see eye to eye or are poles apart. Like most things in the boardroom, there are no right or wrong answers, but some are no doubt better than others. So here we go:
1.What is the most important role of the chair? Entire books have been written on this subject and if anyone finds an entertaining one, I’d love to know because the ones in my personal library are a cure for insomnia. Strictly Boardroom will go for the standard “skills at running an effective meeting” as a generic answer to the opening question. But to be more specific, the best chairmen tend to let other members of the board speak first , before synthesizing and providing direction to the rest of the board afterwards; no easy feat. This is a critical role, particularly if there are differences in opinion, which there usually are!
2.What is the most overlooked aspect of due diligence in joining a company board? –Strictly Boardroom’ money is on the company share register as a dark horse on this one. Most new directors will look at the people, the assets and the financials, but I suspect that the share register rarely makes the top of the DD list. To state the obvious, a good share register is worth a great deal to a company and will allow the board to focus on actual growth. A bad share register can be a painfully long process to fix – thus absorbing a large amount of the board’s time and effort in the process
3.Do you need to like your fellow board members? I may get shot for this, but my answer is a definitive “no”. But it certainly helps if you do.
For example, a former consulting colleague once advised me when interviewing for new staff to ask whether you could still work with the person under pressure and towards the end of a 16-hour day. My take on boardroom dynamics is along the same lines. You don’t necessarily need to like everyone around the table, but some board meetings will be at the end of a very long day and be pressured. So you must have admiration and respect for what each board member brings to the table. Liking everyone is just a bonus.
4.What are the best and worst things about the boardroom? The best is easy. Isn’t being at the boardroom table ‘living the dream’, my code for hard but enjoyable and rewarding work. The worst thing is receiving the sort of flak from shareholders that is usually reserved for crooked politicians, during those occasions when the company’s shares are going down.
So how did you go? Did we agree, or should we just agree to disagree? Therein sits part of the challenges of directing a company in that there is seldom a single definitive answer to any question – and all too often no easy way to decide which of several possible answers is the more correct.
As for the initial question posed as to whether it is worth taking the AICD company director course, I think you already know the answer to that.
Allan Trench is a professor at Curtin Graduate School of Business and professor (Value & Risk) at the Centre for Exploration Targeting, University of Western Australia, a non-executive director of several resource sector companies - and the Perth representative for CRU Strategies, a division of independent metals & mining advisory CRU group (firstname.lastname@example.org).