There has been so much discussion in recent months about the make-up of a Board, the qualifications and abilities of it’s members, and Chairperson. Let’s take a moment to focus on the Director, we will focus on the Chairperson in our next blog.

Being a Director should be challenging, interesting and bring value to all involved – you, the Board, the Company, its employees, and shareholders.

The Fiduciary duties of a Director are clearly laid out in S.228 Companies Act 2014. The problem for a number of people (whether already a Director or just thinking about it) is how to translate the various duties and legislative requirements into being a useful and practical Board Director.

Finding the right fit is very personal. For example, there is no use being a Director of a manufacturing company if manufacturing bores you rigid! Likewise, you have to ask yourself if you can bring anything of value to a Board where you do not respect or like your fellow board members.

Any Director should consider the basics:

• common sense

• corporate governance

• frequency of meetings

• agenda

• decision making and implementation of same

• do you ever listen to yourself, e.g. do you talk too much, too little, have difficulty expressing your opinion, could you be perceived as being belligerent or a pushover; and

• interaction with Management Team, staff and shareholders.

The above is particularly important for individuals who have been acting as Director(s) for quite a while. We can all fall into the trap of becoming stale or set in our ways. Why not consider:

• carrying out additional training

• how long have you been a Director?

• are the reasons you wanted to become a Director still valid or, if they have changed, have you changed with them?

• would you like to do more within your role, e.g. act on one of the Board Committees?

• how much capacity do you have for considering taking on additional directorships?

Take a few minutes out of your day to think about yourself. Part of being a good Board director is being engaged in the process in the most effective manner possible. Try to find your own personal enjoyment and challenge in a role where we can see the impact and relevance of our actions.

Everywhere we turn there seem to be advertisements advising us to check our personal health for this that and the other. No doubt all excellent advice but do we ever take time to check our corporate health as directors? It seems to me getting either one wrong will impact on us all to some extent.

There are no blood pressure cuffs when it comes to corporate health but there are a few checks we as director can all do to at least get started.

• Management accounts – should be circulated and read by Directors on a regular basis.

• Board meetings – should be held at least quarterly where Directors consider the overall direction of the company and do not get bogged down with the nitty gritty which is the role of the Management Team.

• Chairperson – how is that role managed by the Board and by the Chairperson. He/she should be capable of ensuring all participants have an opportunity to be heard, and that meetings do not run on for ages. Unfortunately, we have all been at meetings where certain individuals like to hear their own voice no matter the relevance of their words.

• Risk Register – does your company have one, and if not why not? A Risk Register (properly managed and regularly reviewed) can save an awful lot of headaches. For example, if you have a supply contract that has to be renewed annually you need to be able to negotiate this ahead of time and not after the event.

• Insurance – when were the company insurance policies last reviewed and at what level of detail. It is always surprising how little directors know about insurance cover even on a basic level such as whether or not they are covered under their own company’s director and officer liability insurance.

   

• Statutory filings – does the Board have a timetable of statutory filings even covering basic things such as filings with the Revenue Commissioners – Companies Registration Office – Central Registry of Beneficial Ownership.

   

Having the basics in place can help to ensure issues are dealt with in a timely manner with minimum fuss. Now don’t tell me that doesn’t help keep your blood pressure down!

A Board should challenge itself, and its Management Team. It should actively review, question, explore potential flaws, exploit current and future potential of the Company. The greatest threat faced by any Company is not political or economic but, complacency. Having a diverse Board should be a key tool to ensure complacency does not exist or creep into a company structure unseen or, unchallenged.

Board Diversity should embrace all diversity in order to maximise its own potential, for example:

o   gender – a no brainer, society consists of different genders, why would a Board not reflect the realities of society;

o   ageism – maintaining a balanced age profile on a Board provides experience and fresh thinking;

o   occupation – Director occupations can bring an imbalance to a Board, e.g. the majority of individual Directors on the Board of an engineering company should not be engineers;

o   length of service – staying too long on a Board can, in some cases, end up being a little like a guest who is enjoying themselves so much they do not realise they are no longer as entertaining as they once were!

Appointing an individual simply to “fit” whatever is the current hot topic for Board Diversity is insulting to the individual, and an utter waste of time for the Board, Management and the Company itself.

Boards must willingly embrace the concept of diversity in all its guises, and support the individual Directors, and the Company adapt to the change in Board dynamics.

Board diversity is for the long haul, there are no shortcuts but, like anything that is hard work the results should be worth waiting for.