Dr Stuart Wilkinson, Assistant Director, Innovation and Engagement University of Oxford shares the important questions you need to ask and find the answers to before becoming a Company Director.
To some the idea of being a director of company sounds glamorous and exciting, bringing responsibilities and influence. It can conjure up the impression of leading the show and being in the driving seat of a company. For some it can even be a trophy on the CV, a sign you are making it. But becoming a director shouldn’t be taken lightly, it comes with serious legal responsibilities (and potential penalties) , and requires a broad range of skills and understanding.
In many ways its the kind of role that helps enormously if you have done it before… which of course is hard if you are doing it for the first time. It’s one of those things to think about and prepare for over time, just like you wouldn’t want a pilot to jump straight into the cockpit, you want directors who are prepared and considered to be at the helm of a company.
The first thing you should do is find out what the responsibilities and liabilities of being a director are... many lawyers will provide notes and advice, or your university TTO, or student enterprise teams will be able to point you in the direction of professional advice.
But once you’ve done that what questions do you need to ask of yourself and what do you need to find out about the company?
Part 1: 6 good questions to ask about yourself
Whether you have never been a director before, or not there are some questions you should ask about yourself before you take on the responsibility
- What useful skills and experience do you contribute to the board? Boards are not great places for passengers. Then need to be lean, and yet full of complementary skills and expertise that will help navigate through the issues faced. As such everybody member should be bringing something to the table… what will you bring into the mix from your experiences to date? Is it needed?
- What knowledge /experience do you have of boards? – If you haven’t been on a board before, what real experiences can you get to prepare yourself. Perhaps you could talk to someone who is a director already and get their take on things, maybe even ask to sit in on a board meeting, Is there any formal training available to you about the roles of being a director?
- Where might you have conflicts of interest? A director usually needs to manage different interests. (An interest is commitments, duty, ambition or goals, perhaps for different groups, organisations or even themselves as a individual). These interests can crossover, be at odds with one another, or appear to be to others and this is known as a conflict of interest. It is very important to reflect on what the potential conflicts there may be and how you might manage them in in advance. So spending time carefully thinking ahead into various scenarios so you can identify potential conflicts, and have a plan to manage them is important, even if it might not seem a pressing issue at the time. Better to scan ahead and be prepared before you are in the thick of it
- Do you have the time it requires? It may seem at the start that it is not much of a time commitment if the company seems to be operating smoothly from the outside. But this isn’t always the case, and may change over time, especially as the various activities of the company get more or less intense.. It is easy to underestimate the time it might take at a particular point in the future. Usually if it requires time, then it is an important issue. So its important to soberly reflect on the flexibility you have to commit in the quiet times as well as the busy ones.
- Where is your support network? Are they people or organisations (like the IoD (institute of directors which include student members) in your network you can seek general advice from. Respecting your commitment and duty of confidentiality to the board, do you have people you can discuss general issues with, who can advise what to watch out for?
- How risk averse are you? Boards are a serious endeavour with serious responsibilities. There are risks attached. If you are the kind of person that doesn’t like risk, or struggles to manage it then perhaps being a director isn’t something to take on quickly or lightly
Part 2: 6 good questions to ask about the company (& board)
Whether it’s a startup or an established company it’s important to find out what you are signing up to so here are 6 questions you might try to answer.
- What skills and experience is the board looking for? Ask not only what you can offer, but what they need. Boards are best kept lean and manageable if they are going to be most effective, so understanding what skills they need and how you plug that gap is a helpful place to start
- How experienced/respected are the other board members? Research the other board members, as you will be joining a team with them. What’s skills and experience do they have. Will you be relying on them more than they will on you? What’s their track record?
- Is the organization sound and sufficiently resourced? Find out about the organisation itself to work out both the size of the task ahead, and also the task itself. If it has an experienced effective executive team and has the funding it needs, then being a director is a different job than if the management is missing and the money isn’t there… so its worth checking it out before you jump on board
- Is it an established operation, or one setting up? A start-up with all the uncertainties of a new business plan, a new team, and a new product is a different thing to navigate than an established stable operation. There are two different ways to learn how a board functions and how to be an effective directors… an easy way and a hard way.
- What are their values… and how do they fit with yours (or vice-versa)? It is worth being clear about want the board and company cares about, and what you care about. Is it making a difference? is it profitable? Is it both? close Alignment is going to make it most easy and rearing, divergence will make it difficult
- How Diverse and inclusive is the board / organization? It’s also thinking about the diversity of the board… one that is diverse and inclusive is likely to be stronger and more able to see potential issues and propose strong solutions than a group with a narrower set of perspectives to bring to bear.
Dr Stuart Wilkinson, Assistant Director, Innovation and Engagement University of Oxford