By Betsy Atkins, Entrepreneur, Three-Time CEO and The ExecRanks Board Member
Over the past 20 years, I’ve served on almost 30 boards for both private and public, including financial services, technology, pharma, hospitality, retailing and manufacturing. In this time, I’ve learned two major boardroom rules. The first is that no one teaches the lessons you must learn to be an effective director. The second rule is that every day as a director can bring a wholly new challenge, danger or question that I’ve never yet encountered.
I’ve written my new book, Behind Boardroom Doors, to help address both these issues for others who may be wrestling with first-person governance issues.
Corporate governance classes, associations and most books on the topic provide plenty of top-down, legalistic theory on governance issues. They tell you all you need to know on fiduciary duties, “agency theory” and director liabilities. But I’ve found that much of the knowledge from these sources leaves even savvy business people bewildered when the boardroom doors close and they face a messy, real-world crisis.
Company revenues collapse in less than a year (and the first you learn of the problem is after the fact). Corporate headquarters has just been raided by the FBI, and your CEO is trying to make bail. An accounting fraud, bribery allegation or insider trading matter just bubbled up to the board level, and you suddenly have to learn a whole new legal language. Oh, and the board learns that a corporate VP’s wife is a porn actress with her own website, and has to decide if this harms the company.
Yes, I’ve seen all of those happen in the boardroom (including the last), and had to learn on the fly what we needed to do. Who do we call first… second… third? What information do we need right now? Who needs to be briefed (and who needs to be quarantined)? What should we not do?
I’ve had to learn these boardroom lessons for myself, sometimes painfully. It’s true that experience is the best teacher, but it’s also the one that charges the highest tuition. My new book is written to give the reader first-person boardroom insights at a “discounted tuition rate.” You can learn from the scars earned by someone else — me.
The lessons I’ve learned go beyond crises, of course, and this board experience makes up most of Behind Boardroom Doors. For example, the Number One lesson I’ve learned is to work as if the company whose board you serve is your own company. The information you receive from management is never enough. Do your own digging, seek outside advisors on the company and seek intelligence from employees, outside sources and site visits. Be active, not passive.
There are many more lessons to be learned. How to size up the talent and mindset of others in the boardroom with you, and shake things up if needed. Why CEO succession is the board’s single most important job, why most boards fumble it, and how to drive a plan that works. How technology, new business models, data security and diversity are radically disrupting how all business operates, and what you must do as a director to focus management on the future. Where the biggest risks for the company and you as a board member come from, how to prepare, how to deal with them. And, how all the lessons you learn as a director will still leave you needing to think on your feet, innovate and drive change when the next unexpected challenge hits.
Behind Boardroom Doors doesn’t pretend to be an “everything you need to know to be a director” guide, because this incredibly vital business role will always be a work in progress. For the new director learning his or her way into the boardroom, it will help you expect the unexpected.