Could I become a company board director?

In senior management positions, you are often requested to have previous experience of a similar level/type of positions, so also at the board level. Still, everyone comes to a board position in their turn for the first time, and then there will certainly be plenty of questions.

What exactly does a board director position mean? What does such a position require? Could a board director position be interesting to me? At some point in their careers, these types of questions run through many business leaders’ minds. The more experience and competence you have, the more likely you may become interested in board positions. You typically enter a board position at the CEO level. Now you have experience of what it means to work as a CEO, and you have experience of working with the board.

However, a board member does not always require a CEO or even a business executive’s experience. Company boards demand a wide range of high-level expertise, which may concern specific products or technology or strategic business expertise related to a particular industry or market. In this case, substance competence may be more important than previous CEO experience.

Boards are looking for experience, perspective, vision, and high-level expertise that serves the goals and needs of the owners/company, so a certain age is a basic requirement for board positions. So how old should one be? The beauty here is in the eye of the beholder. Still, suppose you need to have experience, perspective, vision, high-level expertise and, in addition, preferably experience in CEO-level positions. In that case, the age usually starts at least with four and in the larger companies with, five or six. There is a lot of talk about age racism in working life. This phenomenon does not apply to board positions. In board positions, advanced age, i.e. experience, is considered an asset.

An exception may be pioneering companies in rapidly developing high technology where, if you must have certain expertise and experience, this may not always be found in people over forty. If a person with such expertise is wanted for the board, it may be that the age criteria will be flexed downwards.

So what do the board directors do?

The board of directors is a central body in a limited liability company that has the power to manage and represent the company. However, the highest decision-making power lies with the General Meeting, which consists of the company’s shareholders, so each board always reflects the will of its maker, i.e. its owners. The task of the board of directors is to promote the interests and intent of the company’s owners.

Some examples of items on a Board of Directors agenda:

The Board of Directors must have a good understanding of the expectations of important stakeholders.
The Board of Directors is responsible for the company’s administration and organizing its operations, and ensuring that the supervision of the company’s accounting and financial management is appropriately arranged.
The Board of Directors hires and fires the CEO (possibly also other senior management) and decides on the terms of employment.
The Board steers and supervises the company’s operations and decides on key operating principles, objectives, and strategies.
The Board of Directors regularly and systematically monitors the company’s operations, finances, budget, and action plans and supervises their implementation.
Many decisions affecting the company/stakeholders are operational, and the board must ensure that it is updated on relevant matters.
The Board of Directors approves the financial statements and interim reports.
The Board of Directors usually approves possible acquisitions/divestments, and e.g., significant contracts whose value exceeds a certain threshold.
The board’s task is to identify and manage the company’s risks, including financial risks, ethical issues, reputation management, and compliance with the law.
One of the most important tasks of the Board of Directors is to support and spar the CEO in their duties, but also to challenge the management’s ideas.
Sometimes the top management is so caught up in their perspective or believes so blindly in their vision that they can no longer see the forest for the trees or lets overemphasized ambition and reward systems cloud their judgement so that they may not fully understand the consequences of their strategy or decisions.
When this happens, the board of directors is the very last checkpoint, and the board’s risk management capability is vital for the company.
Not all company boards succeed in this, as we have seen from the adventures of a well-known Finnish company that recently cost Finland a lot of money.
By now, every reader should understand that the board isn’t just a bunch of nice people having coffee meetings but has a lot of responsibility.

How the board’s agenda and actions manifest practically depends on the company

Everyone understands that the board’s agenda and actions in different companies can be very different. These are impacted by what stage of development the company is at, the industry and what was decided when the strategy was made. These are impacted by the ownership, size and structure of the company.

Compare private enterprise vs listed company, group headquarter vs group daughter company vs fully independent operator, limited liability company vs cooperative, state-owned company vs family business, and small company vs big enterprise. And we still have the startups that are a world of their own. The industry has a huge impact. E.g. companies providing health care and services for older people have completely different requirements for board work than, for example, a construction company or a company exporting IT software or importing food products. The bigger the company, the more demanding the board position is. The role and activities of a board member in a billion-euro turnover international company with 10,000 employees is very different from a similar role in, say, a company of 20 million and 50 people. In a large company, board decision-making concerns very different issues and is of a different size than in a small company.

However, from this, we should not conclude that the competence of a board member, the significance and complexity of board work in a smaller company is any less important to the owners, board members or the company’s operations than it is in large companies.

I’m interested in board work; what should I do now?

First, you should make it clear to yourself what a board membership means, especially what it could mean for “you”. Also, think about what skills and qualities can be expected of you as a member of a company’s board of directors. Below are some examples of “requirements” that I consider important:

Board members must have good general business and financial skills and have the ability to understand and interpret numbers, e.g. profit and loss reports, investment statements, income statements, balance sheets, and financial statements. Otherwise, it’s rather hard to spar with the CEO if you don’t understand what the CEO is talking about and doing, isn’t it?
Board members are usually expected to have experience and expertise in the industry in which the company operates and the ability to understand the special characteristics of the industry, the competitive situation and potential industry scenarios and developments.
A board member acts as a strategic advisor to the company’s management, so good communication and interaction skills are important to be able to communicate effectively with other board members, management, and stakeholders.
Board members must have the ability and skills needed to examine and analyze entities and complex situations and make decisions based on this – and also understand the consequences of their choices.
Board members are expected to have independent thinking and, if necessary, the courage to question and challenge the strategy and views of the company’s management/owners, including the opinions of other board members.
Board members should represent diversity, different backgrounds and areas of expertise. Different points of view and experiences promote good decision-making.
Honesty, ethics and responsibility are key qualities for a Board member.

So how can one “become” a board member?

A board membership is a position of trust, not an employment relationship, but you must want and strive for this position just as well. Despite the title, position, status and perhaps slightly different nature of the work, on the practical level, this too is a “job”, so when wondering about a board position, it is not much different from wondering about any next career move. Exceptionally successful top executives may have the privilege of leaning back in their chairs and waiting for a phone call, but everyone else (the remaining 99.99% of us) will have to make an effort if we want to move on to a board position. No one will come knocking on your door asking if you are interested. There are always factors that can either contribute to or prevent you from reaching this position. Identify them. Here are a few basic things good to keep in mind:

First, understand why you want a board position. What draws you there? What is your motive? What are your expectations?
Find out what a board membership truly means. Requirements, responsibilities, obligations, practical work and use of time.
Understand that you are personally responsible for your actions and decisions on the board.
Understand that, and also why each company and board is its own.
Think about what you know and what you could contribute to a board position.
Also, understand your possible professional “shortcomings” so you do not unnecessarily go for the wrong jobs.
Think about what kind of activities/roles and level of board positions you want.
Carefully study the company you are interested in and examine what kind of board, management, and owners the company has. Do you feel they are competent? Do you fit in? Do the company’s values suit you?
Most people are interested in board positions mainly for professional reasons; the remuneration for the job is usually quite moderate. Check if the typical rewards align with your expectations so you don’t get disappointed.
Think about how you make yourself an interesting target (your brand) in the “board member recruitment market” and how you can make this visible in your “cover letter”, CV, interviews, in all your activities where you want to promote your cause. Also, give a thought to what these activities could be.
Understand how the “board member recruitment market” works, who recruits boards, how, what channels and methods are used – and how you could act here to your advantage.

The above means a lot of work and possibly a lot of time as well. On a knowledge level, most people are likely to be already familiar with most things; after all, we are here mainly talking about experienced business leaders who are considering moving to board positions. However, even though things may seem simple, when you think about them all alone, they are not anymore always so self-evident and sparring only with oneself rarely takes you much forward. When you spar with someone else, you get new ideas and confirmation of many of your thoughts.

Sometimes sparring with a good colleague or friend feels natural and comfortable. Sometimes it’s easier to spar with a stranger, for example, with an executive search consultant (who has conducted board searches), in which case you will receive unbiased feedback at the same time. As a rule, the discussion must always be confidential.

I have 30 years of experience in executive search for senior management, and I, too, have offered career consultations and sparring that have received good feedback—for more information click here.