Building a successful company takes many years, and the best way to safeguard that hard work is to establish an accomplished and reliable Board of Directors. Experienced business professionals find board spots as an appealing opportunity to share the knowledge they’ve gained throughout a successful career. However, the only way those new Board members can be successful is if they receive a thoughtful orientation process.

As you consider what the orientation process might look like for your Board, you should include the following components:

  1. A detailed historical narrative outlining the history of the company or organization with particular emphasis on the most recent 3-5-year-period. This narrative should include at a minimum:
    • Key events that have impacted the health and welfare of the company, such as various strategic initiatives, mergers and acquisitions, divestitures, product changes, changes to laws or regulations, etc.
    • Past corporate governance changes typically captured in corporate by laws.
    • Financial results that might reflect a pattern of volatility accompanied by an explanation of what contributed to both positive and negative performance.
    • Explanations of key management and staff changes along with retention statistics and the impact these changes have had on corporate culture, financial results, etc.
    • Board and staff organization charts including Board committees and roles.
  2. An executive summary of:
    • Strategic plans that are in place and the effectiveness of current strategies.
    • A review of audited financial statements with explanations of key footnotes.
    • A review of any regulatory exams with a summary of key recommendations and the company’s progress on implementing accepted changes
  3. In the absence of strategic plans:
    • An overview of competitors and an assessment of the current competitive environment.
    • Plans for to maintaining a strong competitive position, or;
    • Plans to improve the competitive position in the marketplace.
  4. The company’s or organization’s funding strategy.
  5. Guidelines for Board members outlining how to discharge their responsibility for confidentiality, while fulfilling their responsibilities to various constituents. For example, when is it appropriate to share information with outside parties regarding confidential matters impacting current or future operations of the company or organization?
  6. An overview of the CEO evaluation process, performance guidelines for any management incentive plans, the performance expectation for Board members and how the Board is held accountable for its performance.
  7. A review of key corporate policies, both Board policies and Management policies which guide the day-to-day activities of the company. Policies typically cover topics such as human resources, budget and finance and compliance.
  8. A summary of the corporate culture which typically includes:
    • A clear mission statement providing direction and meaning.
    • A sense for the depth of involvement of the organization’s members (participative management).
    • The organization’s ability to adapt and respond to change.
    • An understanding of how values and principles are consistently applied.

Without an effective Board orientation process similar to the one outlined above, how can any individual be prepared to exercise his or her fiduciary duty? Given the responsibility Board members have accepted to represent various company or organization constituents, you can’t afford for them to be Board members in training!

Effective Board governance demands independent thinking and actions in order to ensure the long-term viability of any corporate entity. It takes many years to build a successful company. One individual in a key position without proper oversight can destroy that company or organization in a relatively short period of time. In my judgment, this failure usually traces back to a failure of the Board of Directors to exercise its fiduciary obligation.

Donald R. HATT

Mr. Hatt, a resident of Viera, Florida, spent more than forty years in executive roles within the financial services industry and served on numerous for-profit and non-profit Boards of Directors including the role of Chairperson. You may contact Mr. Hatt at (email) or 603-498-8779(mobile)