Due diligence before you accept a board role

One of the most important steps to take before joining any board is to carry out due diligence. This is gathering vital business information about a company or organisation you intend to join as a director. For more information about due diligence, please see The Treasury’s website.

Questions to ask yourself and the board

It makes sense to ask some questions before considering a board position – both of the board and of yourself. Making a list of questions is the first step in assembling the information needed to help decide whether to accept a board position. This list is intended as a guide only. There may be other questions specific to your own circumstances that you will want to add.

Questions about the board:

How much time is required of a board member?

Find out how often the board meets, where it meets and how long the meetings normally last. When assessing how much time a board role is likely to demand, keep in mind that you will also need to read the meeting papers before meetings and that you may be required to attend other functions and carry out other tasks between meetings.

Why do you want me on the board?

What skills or experience are sought from me and what new skills will I have the opportunity to develop? Knowing the board’s needs and expectations will help you to assess whether you can capably fulfill the role asked of you. It is also important to find out what new skills and experiences you can expect to gain by serving on this particular board. Finally, it can be helpful to ask why a board vacancy exists.

Who else is on the board? What are their backgrounds?

A properly functioning board requires a good mix of skills and experiences. If all the other board members have similar backgrounds to you, you may want to consider if you can offer something extra. Don’t join a dysfunctional Board. Do this by ensuring your fellow Board members are of a high calibre.  A Board with a great deal of conflict is not helpful in developing your governance career.

What are the organisation’s roles, mission and direction?

It is important to have a good understanding of what the board’s organisation does, why it does it and what it plans to do in the future. This will help you to assess whether you can support and work towards the mission.

What phase is the board in?

All boards go through a process of development. A recently formed board can have start-up issues to tackle. There may be policies to write, directions to establish, a mission to articulate, and strategies to develop. Such a board may be more time-consuming and challenging than one that has been around for some time and has established processes in place. Getting involved in a new or transitional board can bring immense satisfaction as you contribute to the building process. Long-established boards can also be very demanding if they are undertaking a change of focus or restructuring.

What will my responsibilities be? Do you have a job description for the board members?

Some boards will have a detailed job description to help incoming board members understand the tasks they will be expected to perform. If the board hasn’t yet developed such a document, you could ask an existing member to describe what they do during an average year.

Are there some recent meeting minutes I can review?

You should ask to see the minutes from several years – some experienced board members suggest going back as far as five years. Reading the minutes will give you a feel for the type of issues the board deals with, as well as the type of decisions that have been made in the past.

Has there been any litigation, or have there been complaints about the board?

It's a good idea to ask about the organisation’s history. A less than appealing public image may be a turn-off for some prospective members; others will see it as a challenge.

How financially viable is the organisation? May I have a copy of the financial plan and the budget?

You should be fully informed about the existing financial position before you agree to take on these responsibilities. As a board member, you will be custodian of the organisation’s finances. You may even be held personally liable if things go wrong.

What information or support will be available to assist me to do my job as a board member?

It's a good idea to find out what resources will be available to help you in your new role. These could include formal or informal mentoring programs, orientation sessions, a staff member to provide administrative support, office equipment, stationery or reimbursement for costs. Also, check the level of support offered to Board members by the Chairman and other Directors.

Questions for yourself:

Once you've uncovered as much information as possible by speaking to board members, either informally or as part of a formal interview process, you will be in a position to consider some questions for yourself.

Can I commit the time and energy the position deserves?

Make a realistic assessment of the time required by a board position and compare this with how much time you actually have to offer.

Can I add value to this board?

Once you have found out why the board wants you and what skills you will be expected to contribute, you need to decide whether you are a suitable candidate. An honest self-assessment may be of more value than an assessment others have made of your skills and aptitudes.

Is this a supportive organisation?

Does the general atmosphere lead you to feel that board members are open and accepting? If you have special circumstances, such as a physical disability, it is important that you feel comfortable with the organisation and its board. For example, are meetings held at accessible venues?

What do I want out of this experience?

People join boards for many reasons. Understanding your own motivations will help you assess whether or not your expectations are likely to be fulfilled.

Can I hold this position with integrity and without unmanageable conflicts of interest?

By examining the functions and past decisions of the board you can assess whether there are situations you might encounter that could impact your business or personal interests, or those of your family and friends.

What is the reputation and track record of the organisation’s head?

In order to govern effectively, the board needs to be able to rely on an effective manager. It is a good idea to consider the capabilities of the Chief Executive/Executive Director.

Does the board clearly understand what its goals are and are those goals achievable?

A board that does not know where the organisation is going is difficult to be part of as decisions could be inconsistent and performance may be irregular. Getting back on track will require hard work and may not even be possible. Similarly, a board that has unrealistic goals is setting itself up for failure.

Do I share those goals?

Once you have found out that the board has achievable goals, you need to decide if they are goals that you believe in. If you do not share the board’s goals, it is unlikely you will be able to enthusiastically contribute to the board’s activities.