Insight

New director onboarding

​How quickly a new director is able to contribute meaningfully to the work of the board and its committees can hinge directly on the quality of the onboarding process.

For any new director, a learning curve comes with the territory. Just how steep that learning curve is—and how quickly a new director is able to contribute meaningfully to the work of the board and its committees—can hinge directly on the quality of the onboarding process.

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New director onbaording by section:

  • Overview
  • Getting started
  • Initial orientation
  • Going deeper
  • Discussion topics

Overview

For any new director, a learning curve comes with the territory. Just how steep that learning curve is—and how quickly a new director is able to contribute meaningfully to the work of the board and its committees—can hinge directly on the quality of the onboarding process.

Overview

Understanding the business—its operations, strategies, risks, competitive landscape, and management team, as well as the responsibilities and culture of the board and its committees—takes time. A robust onboarding process that includes essential information and briefing materials, quality discussions with key people, and a “road map” for getting up to speed can greatly accelerate a new director’s integration and contribution to the board’s work.

Directors joining their first board face the added challenge of understanding the board's unique role and how it differs from that of management in helping to oversee and guide the business forward.

Formal orientation programs alone may be inadequate to get a new director up to speed and able to contribute to the work of the board early on. Moreover, onboarding needs may vary from director to director depending on a number of factors, including the director’s background and experience, and the role the director is expected to play on the board and board committees. As a result, a new director should be prepared to take responsibility for his/her onboarding plan, working with management and others to determine how best to get up to speed and build a strong foundation for informed oversight.

Elements for new directors to consider as part of an overall onboarding framework include:

  • Suggested reading
  • An initial orientation session
  • Additional one‑on‑one meetings with key people in the organization to develop a deeper understanding of the business, its key governance processes, and its leaders.

No "one size fits all"

Onboarding is not a “one size fits all” process, and may vary considerably depending on the company and the background, experience, and areas of interest of a new director. While management plays a key role in shaping the onboarding program, every new director needs to take charge of his or her own onboarding to help ensure that it is properly tailored and focused.

A good onboarding process should provide information about the company to enable a new board member to add value based on his or her own unique experience and perspective. And a director's education should not end with the onboarding process. Continually seeking out relevant information from internal and external sources and a deeper understanding of the business, the competitive landscape, and emerging opportunities and threats are essential to provide effective oversight and bring insight and foresight to the boardroom dialogue.

Ultimately, a robust onboarding process should help position a new director to engage in a healthy, ongoing dialogue with management, fellow directors, and others with insights into the company and the business environment in which it operates.

Getting started

Suggested bacground reading materials

A new director will want to review a number of background materials, including

Information about the company

  • SEC filings (Form 10-K and 10-Q, proxy statement, Form 8-K)
  • Earnings releases and materials used for analysts’ calls for the past year or two (including a transcript of the question-and-answer period as well as management’s prepared remarks)
  • The most recent materials provided to the board and the committees to which you will be assigned, as well as minutes for the past few meetings for the board and all committees
  • The company’s strategic plan, as well as information prepared by management or third parties regarding customer needs, the existing competitive landscape, and emerging competitors
  • Third-party assessments including analyst reports, vulnerability studies, and any communication from activist or institutional investors regarding the company or the board
  • The company’s top-level organization chart, bios of the company’s leadership team, and succession plans for the CEO and other key executives
  • Recent reports and/or survey results assessing the company’s reputation, culture, and the strength of its brand(s); and, if not otherwise included, presentations made to the board during the past year on risk, strategy, succession, and crisis management
  • Reports on the company’s compliance program and any government investigations or significant litigation

Information about the board and its committees

  • By-laws and Corporate Governance Guidelines
  • Committee charters
  • A description of the company’s directors and officers liability insurance
  • Policies applicable to directors, such as the company's Code of Conduct, conflict of interest policies, insider trading policies, and others as applicable

Additional resources and reading

Initial orientation

Most companies provide an initial orientation session for a new director. While the length and formality of the orientation will vary by company, it should include an overview of:

  • The business—including products, services, customers, and competitors;
  • The financial status of the overall company and its key business units;
  • The company’s near‑ and long‑term strategy;
  • The key risks facing the company and the company’s processes for identifying and managing risk; and
  • The company’s culture.

Who participates in the initial orientation session will vary depending on how the company’s orientation process is structured. If the initial orientation is viewed as the first step in a more lengthy process, only a few key executives might participate in the initial session—e.g., the CEO, CFO, and General Counsel. If the initial orientation is viewed as a more comprehensive session, it might include a number of other participants, such as all members of the C-suite and key subject matter experts.

Going deeper

Developing a deeper understanding of the company and the board

Regardless of whether it is part of a formal orientation process, a new director will want to have one‑on‑one discussions with a number of key business leaders to gain a better understanding of the company—the culture, strategy, key risks, strengths, areas of opportunity and concern, etc.—and to get to know the leaders outside of the formality of the boardroom.

Initially, it may be helpful to get the “lay of the land” by meeting separately with the nonexecutive chair/lead director, if there is one. What are the hot‑button issues facing the company? What issues have management and the board been spending the most time on? What governance processes work well or not so well? What is the culture of the company and of the board?

The General Counsel can provide information about the board from a legal and process point of view, including the committee structure, the role of each committee, and how the committees coordinate and communicate about oversight activities. The General Counsel can also provide advice on director responsibilities and independence requirements and updates on significant litigation, investigations, or other compliance-related matters.

Following the initial orientation session, a new board member may find it valuable to meet one‑on‑one with other leaders in the business, such as the CEO; CFO; CRO (or chief risk officer equivalent); CIO; CISO; and leaders of sales, operations, marketing, and HR to get their views on key company‑wide issues, including:

  • The company’s strategic direction and key risks to the strategy
  • Effectiveness of risk management processes and the overall control environment
  • Tone and culture of the organization, including ethics/legal/regulatory compliance as well as whether the organization is future-focused, innovative, and open to reinvention as necessary
  • Strengths and weaknesses of the management team and the board
  • The company’s acquisition strategy, including any potential acquisitions under consideration.

Business leaders can also provide important insights on issues specific to their areas of focus and responsibility. 

Board members can also get a good view of the company by going beyond the C‑suite: Visit the factories, stores, etc., as applicable to your company.

Discussion topics

Other potential discussion topics

The following is a list a of possible issues for one-on-one discussions with key business leaders that can help deepen a new director's understanding of the company.

Lead director/nonexecutive chairman

  • How the board interacts with the CEO and other officers, and how important decisions are made (formal and informal processes)
  • Toughest issues facing the board/committees
  • Board culture—including openness and candor of communications and debate between management and the board, and among directors
  • Committee chairs
  • Expectations and role of the committee members
  • Current composition of the committee (skills, backgrounds, experience, and expertise)
  • Scope of the committee’s oversight responsibilities
  • Strength of the committee’s oversight processes
  • Results of the committee’s last two self‑assessments

Chief marketing/sales/strategy officers

  • How the company defines its target customers and the methods it uses to understand and develop products to address customer needs
  • The company’s approach to innovation
  • How the company monitors and leverages evolving competitive, social, economic, and political trends
  • The strategic planning process, the frequency with which the strategy is reviewed, the process by which external trends are assessed with respect to their implications for strategy, and the measures and metrics used to track progress

Chief operations officer

  • How the company leverages its supply chain for strategic advantage
  • The company’s business continuity and crisis management plans
  • The company’s philosophy with respect to social responsibility issues, in terms of both substantive policies and degree of transparency

Chief human resources officer

  • The company’s compensation philosophy, overview of compensation programs, and linkage between compensation incentives and long-term and short-term strategic goals.
  • How the company attracts, motivates, and retains top talent and the diversity of skills, experiences, and backgrounds needed to execute the company's strategy

CFO and chief accounting officer

  • Company’s earnings trends
  • Disclosure philosophy, including level of transparency, approach to earnings guidance, and use of non-GAAP metrics
  • Adequacy of control environment, including fraud controls, pressures, and vulnerabilities
  • Capital allocation processes, and degree of alignment between short-term and long-term objectives

CIO and CISO

  • How the company leverages technology for strategic advantage
  • How the company manages data security, compliance, and other “defensive” IT risks
  • Nature and frequency of CIO/CISO communications with board, audit and/or risk committee
  • Company’s programs and resources to identify, protect, and respond to cybersecurity threats

CRO (or equivalent role)

  • CRO’s view of the company’s risk awareness, appetite, and tolerance
  • How the CRO views the tone and culture of senior management
  • How the company’s risks compare to its industry peers
  • Strengths and weaknesses in management’s and the board’s risk oversight processes
  • The degree to which the risk organization has a seat at the table and input into significant business decisions

CEO

  • Any significant issues, opportunities, or concerns identified during discussions with business leaders
  • The top opportunities and challenges for the company
  • How the skills and background of the new director—and board members, generally—can be best leveraged for the benefit of the board and the company