A couple of months ago I noted in a postscript that I had a second interview for a board role.  The role was for the board of an unlisted public company. This company has a strong connection with a large listed financial institution, being effectively, a franchisee for two of its branches.  As a result, the board of the company has to grapple with the issues many small to medium size businesses have had to deal with, while at the same time, understanding how to grow and develop a banking business.

The company in question has a strong relationship with its “franchisor” (the financial institution), which itself has developed a number of programs to assist the companies that help to develop the network.  One of these focuses on Director Education, which includes a Board Observer program, education and development opportunities for directors and induction days for directors and observers.

The company has appointed three new Board Observers to its board.  It is the company’s intention to offer the board observers a directorship, but a three month stint as an observer allows the company’s existing board to get to know the observers and work with them around the table.  It also allows the observers the opportunity to understand more about the company and the existing directors and understand whether and how they can add value to the board.  From discussions with the Chairman, I also understand that there is an expectation that this process will allow for board renewal in a gradual and planned manner, with a smooth handover.  Each of the new observers brings different skills and experience to the company.  Having signed confidentiality agreements, been included in board meetings, sub-committees as appropriate and director training as observers, once a mutual agreement is reached to become a director, it should be a seamless process.

It strikes me that this is an excellent way to not only conduct due diligence from both the perspective of the board and the prospective candidate, it is also a valuable process for the aspiring director.  It seems that the greatest hurdle to becoming a board director is that one isn’t currently on a board.  (It could be that one doesn’t have board experience but perhaps eight years on the board of an NFP doesn’t count).  It makes me wonder why there are not more companies considering such a process, given that supposedly there is a desire to increase diversity (age, gender, experience).  This is a good way to overcome the problem when a board has a great candidate on paper but no one on the board has worked with them before.

I know that there will be those with the answers as to why it can’t happen: potential legal ramifications of who was in the room at the time a decision was made or that it may constrain the usual discussion around the board table. But honestly, if boards want to make it happen, they clearly can.  There are some doing it now.

Coffee count: 168