If the board search and vetting process has seen a shakeup over the past few years, so has the actual “interview” process. Chums catching up on past acquaintances and summer homes has given way to a more rigorous process closer to an actual top-level job interview. Often there will be multiple rounds of Q&A with various members of the board (due, I suspect, less to thoroughness than the need to juggle schedules).
At this point in your career, you’re well beyond lectures on the basics of job interviewing. The lessons you’ve learned in your C-level career on interview protocols and making an impression will be valuable in delivering a boardability message. But moving into the boardroom demands some unique skills. Your radar on the spoken and unspoken priorities of interviewers is more crucial for a board role. The various board members might be at odds on who the board wants and needs (as the board and CEO might disagree). A nominating committee chair may tell you how important independent thinking is in the boardroom, while actually seeking a team player.
Your responses also need fine-tuning for board queries. As a rule, board wannabes respond to questions with too much info and too much detail. Marching the interviewers step by step through your previous job titles and all your great achievements will leave them less impressed than bored. Expressing your interest in getting on a board will miss, while telling your specific reasons for wishing to join this board will deliver. And, as we’ll see, your ability to ask intelligent questions about the company, questions that show you did your homework, can make you a star.
Q: “I was named to the CFO position at our company six months ago. Things have gone well so far, but there’s one aspect of this role I hadn’t given much thought to until now—serving on outside boards. Just within the past couple of weeks, I’ve had two contacts on potential board seats. Both companies want to upgrade the finance depth on their boards. I seem to have much more visibility now that there’s a ‘C’ in my title, and I suspect that there may be more board opportunities down the road. Yet I’ll have very limited time available for any outside board commitments, and I need to carefully weigh any opportunities. Can you suggest a few items I should consider before saying yes to a board offer?”
A: As a rising CFO, you’re indeed in a good spot to field board opportunities, but proceed with care. “First, six months on the job may be too soon to dive into an outside boardroom,” says Jane Stevenson, vice-chair of board and CEO services for consultant Korn Ferry. A year would be better, depending on your CEO and board’s view. Stevenson also notes that active CFOs typically take on only one outside board slot, since they’re usually tapped as a board financial expert. Thus, choose carefully—and plan for the long term. “Don’t assume you can serve for one or two years and then move on. Plan on a five-year commitment.”
Once the basic issue of serving on a board is clear, move on to whether you want to join this particular board. “Do your research,” advises Bonnie Marcus, who operates a career counseling service for executive women. “Who else is on the board? How long have they been there? What is the mission of this particular organization?” Study the company’s annual reports, track record, and analyst coverage. Would you be the most junior member of this board or the only non-CEO? That could hobble your contribution.
If you like what you see at this stage, arrange some personal time with the company’s people. Talk with the CEO and see how he or she values board input. Talk also with the board’s independent leader, to see how “independent” the board will really be. As a CFO joining the board, do lunch with the company’s own CFO to talk shop and uncover any financial surprises waiting to pop up.
Finally, compare your values and goals with those of the company. Are there prospects ahead for the company that you feel excited about? Do your own unique skills fill a particular need on the board? Can you sharpen your personal leadership, financial and career skills?
Good news—the company passes your initial vetting. You’ve now received an invite to talk with the chair of a board’s nominating committee and maybe also the CEO. Get ready for a job interview that really isn’t a job interview, but succeeding at it determines whether your boardroom pursuit goes any further.
Patricia Lenkov, of the N2Growth executive search firm, is one of my favorite Boardroom INSIDER sources. She goes right to the heart of what boardroom wannabes need when it comes to what really happens when you sit down for a board interview:
- First, be aware that just one interview for a potential board seat is uncommon today. With a stronger emphasis on assuring board talent, there should be several interviews, just like any other top job. Also, “be mindful of when to push for more information,” says Lenkov. “You won’t find out everything in a first board interview.” Offer to sign a nondisclosure agreement going in, which could loosen up interviewers who hesitate to share confidential info.
- Related to this, you’ll likely speak with different people during the various interviews—a board chair or lead director, the CEO, the chair of the governance committee, and so on. See how their perspectives on the board vary, and weigh their differing responses to the same questions. If a lead director hints that you’re sought for your fresh insights and willingness to ask questions, while the CEO makes clear that he or she wants you just because your vitae look good on paper, think twice. “Is this a working board, or a ceremonial one?” Are there internal disputes over the board’s role?
- Lenkov encourages digging into the tactical issues facing the board and the company, especially any that might later prove troubling. “Ask about less obvious things, such as the company’s financials, pending litigation, pending investigations, and risk scenarios.” Do you get straight, well-informed answers? Or are the responses vague, dismissive? Who seems the most knowledgeable (and the least)?
- Particularly for public companies, it’s much more important to find out about shareholder relations nowadays. “Ask about the presence of activist shareholders, the board role [in IR], and how the board organizes itself to take part—what does this board do if it has a shareholder query?” Again, Lenkov finds the particulars of a response important, but more crucial is gauging whether this board has thought about the issue at all. “Is this board prepared for a shareholder query, or will they respond like a deer caught in the headlights?”
- Kim Van Der Zon, who manages the global board practice at Egon Zehnder, says, “Make sure you understand the role of a board versus that of management. Sometimes, when I ask someone what they’d like to do with a board opportunity, it’s clear they’re treating it like a job opportunity.” At the interview stage, this entails not just knowing a lot about the company but also finding out how well you could fit into its board, to the point of how you could deliver value at the committee level. (At one of the board-wannabe programs I offer for GLG in New York, I asked a very savvy corporate VP to give me an impromptu, 30-second elevator speech on why he should be on a board. He delivered an excellent, quick pitch—on why he would make a good executive hire.)
- The smart board interviewees do their homework in advance. “You have to do your own due diligence,” Lenkov concludes. “People get so excited about a board offer that they forget to investigate. There are risks, especially for novice directors.”
The latter is a valuable point the board wannabe needs to bear in mind. Even if this is your first dance, and you’re eager to launch your board career, director recruiting remains more a negotiation between equals than executive hiring. Yes, the board needs to know more about why you qualify today. But you’re still taking on an important, part-time role with little pay, plus potential legal and reputation risk. Thus, if there’s any party in this discussion who needs to ask a few tough questions, it’s you, the board candidate.
I’ve found the folks Down Under tend to take a practical, how-to approach when it comes to governance. Get on Board Australia is a firm that helps board wannabes in Oz seek and prepare for board opportunities, and their website offers some valuable resources. One item that caught my eye was a cheat sheet of questions the board candidate should ask during the interview. You’ll find the full listing at the GOBA website (https://getonboardaustralia.com.au/), but here are a few good samples:
- The business overall. What have been the biggest recent successes and failures for the company? What are the top strategic goals over the next one to three years? What are the most critical threats?
- The industry sector. What are the most significant challenges facing your industry over the next one to three years? What are the most critical threats?
- Finances. How would you rate the financial strength of your organization? Will any significant investments or write-downs be required in the next one to three years?
- The board. Do you provide directors’ and officers’ liability insurance? How regularly does the board meet; where and when? What are the strengths and weaknesses of the current board?
Those are the basics of board interview questions, but let’s dig deeper into the specifics. Dennis Cagan, head of his own leadership and career consulting firm, offered me a few smart focus questions for your boardroom interview:
- What would you want from me? What do you expect my unique contribution to be? (Since there are many good candidates for board seats, there must be a special quality that landed you on the shortlist. Learning what that “secret sauce” is will offer valuable intelligence.)
- Explain the business this company is in—who are its customers and where does the money come from? Make clear that you’ve researched the company, but you also want to hear the board’s and CEO’s take on these essential questions. Listen to what they say between the lines, and how priorities shift between board members and managers.
- How much of my time will be required? (This includes pre- and post-meeting prep, committee work, phone discussions, etc.). Also, try to learn how this work load rises and falls over the course of the year, crucial to know when gauging time demands with your career (more on this topic later).
- Who else is on (or going to be on) the board? What is the anticipated size of the board, and the balance between inside and outside directors? Again, you should have done homework on this, but you’ll want to know if you fit into an overall board plan, and where that plan may be leading.
- What is the compensation package for directors, and how is it structured? What are the limits and terms on your D&O liability coverage? (Yes, you’ll want to know what’s in this for you, but also how well you’ll be protected.)
I asked Cagan for some follow-up on these questions. Included were queries on the company’s product lines, organizational details, capital structure, leadership, revenues, and so on. However (particularly if it’s a public company), don’t start asking about “items directly answered in the material you should have been provided, or looked up on your own in advance. It says that you haven’t done your homework.” With private or closely held companies, though, these questions are a needed part of your interview due diligence.
A final tip for after your board interviews—make notes. Jot down your impressions, comments, and insights from those you spoke with and any subsequent questions you have. Take these notes while the interviews are still fresh in your mind.
While it’s good to know the things you should do during a board interview, it’s also handy to know what not to do. Shelia Ronning, founder and CEO of Women in the Boardroom, adds a useful coda by spotting some of the biggest errors she sees good candidates commit when auditioning for that boardroom slot.
Some of these are Job Interview 101 items that (we’d hope) candidates have outgrown by the time they’re considered “boardable.” But others are subtle and board specific, and drawn from Ronning’s work with board prospects. Among her foremost “don’t do’s”:
- Arrive without knowing the participants and the board’s plan for the interview. Is it a group setting, or one-on-one? Is it over a meal, in a conference room, in a private office? Given the importance of the director’s role (and your potential importance to the board), don’t hesitate to ask about the interview ground rules in advance. Knowing the landscape helps you better prepare.
- Show up unprepared, or without well-developed knowledge of the company and board. You’ve learned the value of dazzling job interviewers with your background on the company by now, but sitting for a board seat demands a higher level of prep. Do you know the names and job titles of all the current directors? Have you read over the company’s board documents (charter, bylaws, etc.)? Do you know the current committee structure and leadership?
- Forget to bring your own vitae material along. This is both easy to overlook, and easy to remedy. You’ll want your board background, board résumé, and business cards (be sure to bring extras). In case someone else sits in on the interview, be prepared to kit them out with all your portfolio materials (bringing your own material also gives you a chance to review your vitae before the interview starts—if you have to struggle to remember the dates you served on a previous company’s board, what sort of an impression does that send?).
- Not asking questions. As noted earlier, you’re putting your own professional reputation on the line with these folks. Don’t impress them with your naïveté. Frankly inquire about current or pending legal, financial, or operational concerns. Ask why they believe your background makes you a good candidate.
There is another question you’ll need to ask yourself at this point, one of crucial interest to the already-overcommitted executive. Will you be able to meet the time commitment required? You’ll find some useful medians to board time requirements online, but the wild variability of board procedures means that there is no real “average” time demand.
A director may find that service on one board is a time-sink, while at another, very similar enterprise, board business flies past. (Or could it be that the first board just does a really thorough job, while the second takes a dangerously lax approach? Question whether quick, easy governance is also good governance.)
There are clues you can research before saying Yes that will help you read whether a particular board schedule can work for you, as we see in the following.
Q: I’ve held the job of vice-president for our company’s U.S. division for two years now, and I’m starting to draw attention for outside corporate board opportunities. I recently received a call from the company counsel at one corporation and heard from the board chair at another private firm. These contacts are at the preliminary stages and would fit in with my career plans. However, my company is entering several new markets over the next year, and I know that my busy work schedule is going to become busier. How do I make a good, honest evaluation of how much time and effort a board opportunity will entail, and if I’ll be able to handle it with my current company role?
A: Good thinking on your part, especially in not just weighing the potential board seat and your current job in isolation. Misreading the time demands involved could endanger both your “day job” and any board you join.
Start by examining the basics of any potential board. How often do they meet? What has the average meeting length been? What committees would you be joining (the audit committee today is a major time-sink)? How much time do the members put in on average between meetings for review of materials, phone calls, and so on (typically several times more than that spent in the boardroom)? Ask the board chair and several of the directors for their estimates here, and try to come up with honest averages.
Other clues can be uncovered as part of your due diligence on the company. Is this a company that’s facing problems? A firm that has recently replaced the CEO or top members of the exec team, that is working through a restructuring, turnaround, legal issues, or M&A, will not only add to your headaches, but also set your boardroom time clock spinning. Also factor in what this board is seeking from you. Being courted for your specialized expertise or background is a compliment, but delivering that targeted talent will likely tie up more time between meetings.
Good boardroom procedures (or lack thereof) can offer further intel. Review a few of the board info packs that have gone out pre-meeting. Are these typically late, overstuffed, and badly organized? Is this board using online portals and media to smooth the info process? Chat with current directors on how well the meetings run when it comes to time usage, agendas, and structure. While we know that fumbling these housekeeping matters makes for poor governance, they’ll also make your board role more time consuming and frustrating.
Final tip: Look closely at travel options, especially for companies outside of major urban areas. Poor airline routings might mean that even a corporate headquarters near you on a map may require long layovers and changing planes. You could eat up a day just getting to and from board meetings.
So they like you, you like them, and this board can work with your schedule. Time to plunge in? Before taking on a board responsibility, there are a few final downside questions you’ll need to address, particularly your potential liabilities, and how the company hopes to address them.
Directors and officers (D&O) liability insurance coverage has become a must even for private company boards. Not only should it protect you in your role as a director, but assuring solid coverage will help smooth your path into a board role with the powers-that-be in your day job (no one wants to have a top report ensnared in outside litigation). This topic likely won’t cover a lot of time at your initial interviews, but in subsequent discussions you’ll want to learn just how well this company protects its board.
The Foley & Lardner law firm conducts regular National Directors’ Institute (NDI) education programs that can be valuable for the board wannabe. One recent session addressed a topic too many directors ignore (until disaster strikes)—what questions should you ask on a company’s D&O liability coverage?
- Who else shares this policy with me? “Directors and officers” can include a lot of people at the company, and major litigation will have all of you seeking coverage from the same limited pool. Find out if there is targeted “Side-A” coverage just for board members, and if the policy has a “priority of payments” schedule. Don’t wait until the corporate ship of state is sinking to learn there are too few lifeboats.
- When is coverage triggered? Damages or settlements are only the final step in a drawn-out legal process. There are lots of costly headaches facing officers along the way nowadays, from regulatory investigations, various subpoenas, document searches, testimony, and so on. Will your policy offer payment for these expenses when they occur (as opposed to waiting until final outcome of the litigation)?
- Who is our actual insurer? Brokers write coverage from many insuring firms, and these can range from the healthy to those who may go bankrupt the day before a subpoena hits your desk. Ask your broker for specifics, and check the A.M. Best or other rating on their long-term prospects.
- Could my coverage be tainted by others who share this policy? Yes, you’ve been a good, true, faithful fiduciary for the corporation’s interests—but what if some other D or O wasn’t so nice? If it turns out the CFO was committing fraud, will that negate coverage for all the company’s directors and officers? Ask about these “black hat” issues when vetting the company’s policy.
Cyber liability is a subset of these concerns that’s been edging its way into your boardroom agenda for several years now. As you prepare for your boardroom plunge, realize that your hacking liability dangers will be getting a whole lot scarier. Since 2011, the U.S. Securities & Exchange Commission has required listed companies to make “timely, comprehensive, and accurate” disclosure of any cyber risks or events that investors might consider important. In 2017, the Commission increased the pressure with more calls for individual liability, and launch of a new SEC cyber unit. What sort of tech-risk questions do you need answers for?
- What is the scope of your cyber liability exposure? “This goes beyond just personal data security,” notes David Navetta, of the InformationLawGroup. Overall information security, intellectual property, trade secrets, and system operational risk are a few other dangers to keep you awake at night, adds Ben Beeson, of Lockton Global Privacy and Technology, London. Furthermore, “how do you classify the different types of data risk, and what about third parties you work with—how secure are they?”
- How is cyber security risk managed throughout the company? “It’s no longer enough to just say ‘oh, that’s IT’s problem,’” says Beeson. Effective cyber-risk management now demands action from such areas as HR, legal, finance, operations, compliance—anyone who touches data, which today pretty well means every function in the company. The board should assure that cyber risks are being managed “by a cross-functional risk committee” that includes these areas.
- How well do you quantify your cyber-risk exposures? If acknowledging cyber liability is a new trend, trying to quantify it in dollars and cents is even newer. If a container ship with your cargo aboard sinks, there are plenty of data on just what your loss will be. But if someone hacks your servers and gains access to customer charge card information, how big of a hit will you take? What if you’re not sure how serious of a breach occurred? Management will need the tools to offer solid answers on what happened and the potential liability.
- How are you hedging your cyber liabilities involves two approaches: first, controls to prevent cyber mischief, and insurance to cover problems that slip past the first. “There’s no such thing as perfect,” says Navetta. “The question becomes, how do you transfer the risk?” There are coverage gaps in traditional liability policies. Beeson notes that insurance coverage today is still focused on data security and privacy exposures. “There is also a lot of intellectual property exposure that can’t really be quantified or insured. The market is yet to develop in these areas.”
- How do you monitor cyber liability risk from the boardroom? The cross-functional management team above is proof of best practice, but making a solid home in the boardroom for cyber-risk oversight shows due diligence too. The audit committee is the most natural venue (though be sure this is spelled out in a revised committee charter).
Whichever boardroom you end up in, here is a valuable starter tip both for the newly hatched board member and the board itself. Since new execs get an “offer letter” detailing their terms of employment, why not a written offer letter for the new director? Here’s what to include (and what you as a recruit should seek):
- Compensation is number one, of course. The letter should spell out the fees for meetings, committee work, or overall board retainers. Include when payments will be made, and also any one-time “new member” payments or stock grants. Also, what, if any, director expenses are to be reimbursed, and what are the rules for these?
- Speaking of stock, this is where things can get complicated. Include details on any equity grants, options, and the terms of grant. In particular, spell out any stock accumulation and holding requirements, including the timelines required, vesting limitations, and steps to be taken if the director doesn’t meet the rules. Also mention “change in control” over handling of stock.
- Requirements and expectations of the director should be mutually agreed to, such as meeting attendance and telephone availability. This can be especially vital if a director faces a demanding travel schedule. Otherwise, says Beth Ehrgott, of the consulting firm The Alexander Group, “if you have a number of board meetings at remote locations, a director may feel free to bypass those meetings.” (Of course, such travel concerns should have been raised in the initial vetting process.)
- To protect both the company and the new board member, include legal boilerplate on confidentiality, business ties with direct competitors, duties of loyalty and care, conflicts, relations with company employees, and so on. These can reference other documents for detail (such as board bylaws).
- The above are fairly standard offer letter checkbox items, but why not include some specifics on what the board actually wants from this person in the boardroom? Ehrgott is seeing board offer letters that spell out “we are looking for X, Y and Z” items that the board hopes this candidate will deliver. Input regarding overseas markets. M&A. Cyber marketing. Merger integration. Government contracting. If targeted talent helped sway the board decision, mention it in the offer letter.
- For examples of specific new board member offer letter wording, check out:
Board-Seeker Action Items
- Would a mentor, member of your board network, or even someone in your company’s HR office be willing to conduct a mock board interview with you? Seek their expertise on questions to expect.
- Review notes and research you’ve made in prospecting a particular board. Before saying yes to a board interview, review these, making special note of unanswered questions you still have.
- Seek an itinerary for the board interview process (timing, number of interviews, group vs. individual, location). Use this not only for preparation, but also to judge how well organized and serious the board and its members seem about the process.
- Before saying yes, do an online search of the litigation history of the company, its top officers, and its board members. Look for surprises and deal breakers should you join with them.
- Prepare a pre-board interview package including a professional-looking folder/portfolio, which includes a notepad. At least three copies of both your career and board résumé. Spare business cards. A quality pen. A backup pen. A printout of the email or letter you received scheduling the interview, which includes time, place, special instructions, and so on.