With many boards operating in crisis mode and remotely due to the pandemic, it’s vital new directors are able to make a meaningful contribution to board deliberations from the start of their tenure.
Unfortunately, many boards view the induction or onboarding process (as it’s increasingly referred to) as something that involves dropping a wealth of reading material on the new director, including documents such as annual reports, strategic plans, codes of conduct and so on, and expecting them to quickly get on with the job in hand.
This is not a good approach to take for the new director, board or the organisation—particularly when the new starter has important responsibilities and liabilities from day one.
An effective induction can only be achieved via a well-thought-out and carefully structured onboarding process—not by sending a courier to the new starter’s property with a forest’s worth of reading material, or emailing a link to the online board portal for them to peruse, and then expect them to add value from the first meeting.
Delivering an effective board induction
There are seven ways to deliver an effective induction process for directors that will help them to quickly make a valuable contribution to the board:
1. Expectations/role clarity
A successful induction begins at the recruitment stage. Expectations of performance should be clearly outlined in the advertisement for the role, interview, repeated in the letter of offer and mentioned in the board code of conduct. In fact, role clarity is the heart of an effective board. It’s those directors and boards that have clarity about how they will steward the creation of value and demonstrate this through their board and committee workplans, calendars, and be accountable for value creation on their board reviews, who offer the greatest benefit.
2. Journey of learning
Prior to a new director joining the board, the chairman, supported by the company secretary, must take the lead in putting together a bespoke “journey of learning” induction plan. It needs to be 18-24 months long to enable the new starter to build familiarity with the organisation, supported with an in-depth induction pack. After all, the better the induction process the faster the new director will make an impact, and the more effective they will be. This is vital as we start to come out of the pandemic, because boards will need all the support they can get to be able to move quickly in the right direction.
3. Programme of visits and experiences
A new director can’t get under the skin of an organisation by shuttling back and forth to board meetings. They need to get out and about within the business and speak to staff to effectively gain an understanding of how it operates. This is why it’s crucial that an induction process includes a programme of visits and experiences—such as to regional offices—so the new starters obtain a thorough understanding of the business. The knowledge gained from these visits will help ensure they add significant value to the board, not only in the short but long term.
4. Buddy system
Starting a new board role with no knowledge of the way things work and why certain decisions were taken by the board in the recent past is not something the new director can easily learn from the annual report, for example. Having a buddy on the board, an experienced director who is partnered with them, is the quickest way to gain an understanding of how things work, learn about the background of the board and why certain decisions have been made in the past. Having someone on hand to answer any questions enables new starters to be able to get up to speed much faster than they otherwise would.
5. Bespoke governance training
The induction process should include company specific in-house governance training. After all, governance processes are often slightly different between boards. This is usually due to the ownership structure at the organisation. For example, family-owned Schroders is different to Barclays, which is owned by shareholders. The fastest way for a new starter to learn the ropes on governance at an organisation is to have in-house governance training.
6. Formal governance training
Depending on their current level of skills and experience, new directors should have formal governance training with a third party. This should be considered as part of the new starter’s professional development. It could involve training on liabilities, rights, risk, financial competence, corporate governance and how to be effective in board meetings, for example. This training is particularly important for those directors who have never been on a board before.
7. Review the induction programme
Each induction plan should be ruthlessly reviewed so that it remains fresh and relevant to what is happening in the sector in which the organisation operates. This involves the board, and particularly the new director being inducted, being honest in highlighting where it has added value and where it hasn’t. This enables the induction process to be improved over time. However, it’s also important to remember that it’s up to the chair, the wider board and the new director to ensure the induction process runs effectively in the first place.
It’s time to bring the induction process for directors into the 21st century. To make a valuable contribution to the board as swiftly as possible, new directors need a well-planned and efficiently implemented 18-24-month “journey of learning” induction programme. Ideally, it should commence even before an appointment is made, with expectations and role clarity communicated as a key part of the recruitment process.
By following the seven steps outlined above, new directors will be able to add value to the board much sooner than they might have done in the past—which is even more important today with many boards still operating in emergency mode.
John Harte is managing partner at consultancy Integrity Governance.