Integrating new board members with onboarding (induction) makes them effective sooner, and that contributes to overall board performance. But 31 per cent of UK boards have no onboarding (induction) or induction programme at all. Well-planned onboarding (induction) which includes mentorship from the chairman and CEO can make a vast difference in having more effective boards.
The issue of onboarding (induction) for new directors has become of extreme importance for UK boards, as the number of first-time directors, as well as the number of foreign directors with no UK boardroom experience, is increasing rapidly.
Yet 31 per cent of UK boards have no formal onboarding (induction) programme at all, and 24 per cent of directors said that they had had to manage their own onboarding (induction). Several directors interviewed said that nearly a year went by before they actually felt useful and effective on their boards – this means board performance must also have been affected.
UK boards are seeing an increasing number of non-executive directors, according to the London-based research firm Spencer Stuart. Over a quarter of directors joining the top 150 FTSE boards have not previously served on the board of a listed company as a non-executive director.
Including both executive and non-executive directors, one-third of all directors in the top 150 FTSE companies are foreign nationals. Seventy-five per cent of boards have at least one foreign non-executive director and 43 per cent have at least one foreign executive director. This means that integrating these non-executive directors into the work of the board is a growing challenge.
Clearly, a new class of non-executive director is forming, according to consultancy Russell Reynolds Associates. “There never has been a greater imperative to bring these individuals’ potential contributions to bear sooner and more effectively. What onboarding (induction) are UK boards doing to help their new directors contribute meaningfully to board discussions as soon as possible?” Russell Reynolds asked in a recent report.
“Onboarding Has Not Improved”
“Surprisingly,” says Russell Reynolds, “we found that while the role of the board, its composition and, indeed, the selection process has become more sophisticated over recent years, onboarding (induction) has not.”
Non-executive directors highlighted much inconsistency from board to board, including ad hoc induction processes and limited sharing of best practices. In almost a quarter of cases, induction was left to the new directors themselves to organise, leaving their learning out of the understanding and control of the Chairman and the CEO.
“Clearly, directors are resourceful and take their responsibilities seriously, but the danger is that the individual approach provides too limited a view of the myriad of risks faced by the company,” the report stated.
Plan for Onboarding
Onboarding (induction) a board director is much different than going through a rote hiring and orientation process. In the corporate arena, onboarding (induction) is a highly customised protocol that offers new directors the tools, resources and knowledge for them to be successful and productive.
An increasing number of company secretaries, who are most involved in onboarding (induction), are beginning to realise that this is a healthy approach to the induction of new board directors. This approach may look different depending on whether the new board director has past experience in the role or it’s the person’s first board seat.
Enjoying what you are reading? Sign up now to receive more content from Diligent.
Each onboarding (induction) process should be tailored to the needs of the individual, but this is not what is done at most companies, according to the Russell Reynolds report. Most boards have an onboarding (induction) process, but many run only limited and generic programmes. Non-executive directors told us that the best processes were those where the board had developed a clear framework that then was adapted to the new joiner’s experience, the complexity of the business and the board’s dynamics.
An increasing number of new board members are being selected for their special skills, whether in technology or risk management, etc. These directors should be onboarded as early as possible in order to integrate their skills with those of other board members and management. It is expected that it will become more common for boards to act in this way, incorporating onboarding (induction) into board succession planning, as new directors are increasingly expected to sit in board meetings soon after being appointed.
The chairperson should be involved in the onboarding (induction) process, as should the CEO. This is critical, according to Russell Reynolds, as onboarding (induction) involves the acquisition of new behaviours, and discussion with the chairperson should reinforce and provide context for these new actions. Yet only 38 per cent of new UK board members have more than one conversation with either the chairman or the CEO during the onboarding (induction) process.
Mentorship makes a difference, particularly for first-time board members. Organisations should make an effort to arrange mentorship by the chairman and CEO, because the new board member may then become productive faster and board performance should increase accordingly. Some board members say that mentorship would have helped them avoid long periods in which they were not especially effective. This is particularly important for the non-executive director who has to mediate between discussion and debate on the one hand, but avoid ‘taking over’ on the other.
Diligent Boards Offers Customised Onboarding Support
With Diligent Boards, every onboarding (induction) experience can be customised not only for each customer, but for each individual end user. This means offering a variety of training types and styles, and most importantly, unlimited, one-on-one and/or in-person training.
By streamlining workflow and affording users the ability to revise, publish and distribute materials without delay, Diligent Boards maximises the administrative staff’s productivity and mitigates unnecessary complications. Allowing the secretary to grant or limit access to corporate data during transition periods like onboarding (induction) and director departures benefits the administrative staff and the board alike.
Given that board portals house the pivotal proprietary information that can be at risk, the security of the portal is another critical area of evaluation. Diligent Boards has the ability to keep data safe by consistently conducting penetration and security tests; obtaining third-party certifications that prove they employ a systematic approach to managing and safeguarding sensitive company and customer information; and using a minimum of 128-bit encryption for client materials like board books. Diligent Boards protects corporate data and has become an indispensable tool for board communication and management.
Board Portal Buyer’s Guide
With the right Board Portal software, a board can improve corporate governance and efficiency while collaborating in a secure environment. With lots of board portal vendors to choose from, the whitepaper contains the most important questions to ask during your search, divided into five essential categories.
July 29, 2021
What Technology Issues Are Boards and Governance Leaders Facing in 2021?
Discover the biggest technology challenges faced by board governance leaders in EMEA during 2021, where progress is being made and the solutions to where it is lagging.
December 28, 2020
What Role Does the Board Play in Business Continuity Planning?
Continuing in the face of adversity has been the dominant theme of the past year. When the scale of disruption caused by COVID-19 became clear, businesses worldwide were forced to adapt rapidly to the restrictions that came into force overnight. While many organisations have business continuity plans designed to keep…
December 21, 2020
Business Continuity Plan Maintenance: A Step-by-Step Guide
A business continuity plan (BCP) is a living, evolving document. Designed to be activated when unplanned disruption strikes, it must be flexible enough to guide actions regardless of the specifics of the situation. In a fast-changing environment, business continuity plan maintenance is an essential part of the business continuity programme…