The excitement of being offered a new post on the board of directors is fairly self-evident for the ambitious manager.
It may involve the obligatory new car, salary, and other benefit increases, along with the prestige of a nice flashy title.
In a tough economic environment, to take a step back and ask ‘’should I take this role?’’ is possibly not on your must do list. But becoming a board director has various ramifications that must be properly considered, if you want to both survive and thrive.
Below are some suggested questions for you to consider. Some will be more or less relevant, depending upon whether this is on internal or external promotion, but they do offer a good start point.
The relative importance of these and the responses will need your own personal and commercial review. Have you seen, and are you comfortable with:
- The up to date management accounts
- The business plan and forecast
- The cash flow forecast
- The bank facilities and covenant management
- Direction and officers liability insurance
- Outstanding and pending/possible litigation
- The auditors management letter
- The health and safety policies
- Any key policies and their implementation in: CR, risk, customer care, employee diversity
- Are board committee properly established
- Last 12 months board minutes
- Financial accounts for the last three years
- Site visits as relevant
- Key staff meetings and CV review
- Fellow board member meetings and CV review
- First 100 day agreed plan and objectives
- Insurance claims record
- Customer lists to check for dependency
- Do you have any conflicts, or do your associated people, i.e. the other half or children
- Do you understand the difference between the role of the director and that of a manager? If not, have you discussed director development?
- What is the succession plan for the board?
- Have you taken the temperature of the board dynamics?
- Finally, are you ready to accept the substantial personal risks attached to being a director?
Jo Haigh is head of FDS corporate finance services. She is the author of The Financial Times Guide to Finance for Non–Financial Managers, which gives you the confidence to ask the right business questions, make the correct finance decisions and competently speak the language of commerce to your colleagues, managers, customers and stakeholders.
Jo can be contacted on 01924 376 784/07850 475 878 or email@example.com
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