Practical Advice for Aspiring Private Company Directors—Four Key Questions to Ask Yourself
Many of us in NACD are frequently and regularly asked... “How do I get on a board?“ “How did you get on boards?” “Do you know of any board openings?” Or worst, “can you get me on a private company board?”
Being a board director sounds rather prestigious. It’s also a current baby boomer trend, with multiple organizations offering to help to build your board career (for a fee, of course). Being a director can also seem to be a relatively easy way to earn extra money with low risk. All incorrect assumptions, for public as well as privately held companies.
Here’s a collection of advice from me and other admired colleagues; all of whom have been serving on boards for more than a decade. We think your next networking coffee/zoom/call will be more productive when you’ve thoroughly answered these questions for yourself!
Question 1: Why do you want to be a board director?
So often, when colleagues ask this very basic question of networkers, answers are rather nebulous. “I just retired but want to stay involved” or “I want to give back.”
Remember the advice you were given as a recent college grad? Never say, in an interview, “I like to work with people.” Well, here’s your updated director advice: Never respond to the why question with “giving back” or “staying involved.” While, both can be legitimate reasons, they suggest you’ve not thoroughly examined your reasons for wanting to be a board director.
Please be brutally honest with yourself on why you are interested in joining a board. Too many people who reach out to us believe that being a private company director is easy. In fact, a few people have even said, it’s easier than being on a public board. “Show up a few times a year, offer sage advice and collect cash with little or no risk.”
Oh so not true. Private company directors face the same risks as those on public company boards. Unhappy shareholders (investors, family, other), dissatisfied customers/ consumers, and irritated parties involved in acquisitions or divestitures, all have access to attorneys and can and will sue anyone any time for anything.
So, again, why is it that you want to join a private company board?
Question 2: How would you describe a day or a quarter in the life of a director?
This question always stumps networkers. The first answer is “WOW, that’s a good question.” We are well aware that it’s a good one, which is why we ask it.
First, it’s more than a few days a quarter! Being an extraordinary director requires that you continually stay updated on the industry and the competitors of the companies you serve. If you’re not a sitting CEO, this can sometimes be challenging as you are the one who owns being current, beyond what’s in the Wall Street Journal. No surprise, but it’s particularly critical to be on top of the latest cybersecurity issues. You don’t have to be able to code or understand what’s in a tech stack, but you do need to be aware of emerging risks. We’ve all heard of ransomware. How’s your knowledge of hostage ware? One good answer to the question is to share what you are reading and learning about every day.
Question 3: What is your view of the risk involved in being a director for a private company?
You probably have a personal umbrella insurance policy (if not, you should. by the way, I’m not in the insurance business) Do you have a business umbrella policy? We all know about directors and officers' insurance, but for a relatively modest sum, a business umbrella policy provides extra comfort and fewer sleepless nights when unsurmountable issues surface.
Even if your goal is to serve only on family business boards, extra protection is a worthwhile investment. Family owned companies with independent directors generally have a stated goal to remain family-held and succeed through multiple generations. But, life, competitors, and the marketplace get in the way.
Question 4: Have you thoroughly prepared for board networking meetings?
If you were in the job market and were introduced to an executive for networking purposes, what would you do before you spoke with that executive? You’d research the company and the person. You’d identify areas of common interest or, at a minimum, shared linked in colleagues.
As an aspiring director, I’m assuming you’re attending NACD and other director education events, zooms, and calls. Networking with speakers you’ve heard or briefly met is a great way to learn. But, if you want a response to a LinkedIn message or connection, provide a benefit to the director you want to meet. Provide a reason for that director to say yes. Share a unique perspective or experience (briefly) or an article.
While this seems to be rather basic, you’d be surprised how few networkers follow it. It is absolutely essential to approach networking with board members with the same discipline as in a job search. Board member time is as valuable as that of any other executive and deserves the same preparation.
Looking forward to hearing additional questions we should have mentioned and any additional advice you’d like me to share in a future article. Email me at Lynnclarke.email@example.com.
Lynn Clarke is lead independent director for Vollrath Manufacturing and serves on the boards of A. Duie Pyle, Basic American Foods, Diana’s Bananas, and the NACD Carolinas Chapter. She also is the operating partner for Jelly Belly Sparkling Water and was the 2021 NACD Private Company Director of the Year.