Eighty-five directors spending two days at NACD’s Director Professionalism® course in a chilly Florida this week benefited from a thoughtful talk from experienced audit chair Tom Presby. Tom leads the audit committee for Tiffany and Co. and American Eagle Outfitters, and serves four other boards, as well.
“If you are invited to join a board, do the due diligence you would do if you were actually buying the company,” he said. “Get to know the other directors and assess the culture of the board and the company. Your board colleagues and the management they oversee will, in effect, be holding your wallet in their hands.”
Tom believes that there is often a connection between company culture, risk management and company performance. “Are people afraid of the boss?” he asked. “Is it ‘make plan or die’? These are potential symptoms of a dangerous culture.” Other red flags to look-out for, he said, are a tolerance for sloppiness, short-term people making long-term decisions (“If they won’t be charged with delivering it, don’t let them decide upon it”) and lack of follow-through on strategy.
Once you accept your board seat, Tom urges, make time to visit operations to take the pulse of the company, and do your best to attend all the committee meetings of the board, supplementing your industry knowledge and particular expertise with a solid grounding in all the issues bubbling at board level.
Protect your independence fiercely, Tom advises, and don’t be afraid to reject the advice of the general counsel, or even make the CEO impatient. When in doubt, ask the second question. “It’s what you’re there for,” he said. “It’s good to be collegial and supportive, but don’t make friends who’ll be offended when you do the job you’re there to do.”
Above all, Tom said to take time to educate yourself on boardroom issues, for you can never know enough. He walks his own talk. He is spending this afternoon at a finance session for board members. Not leading it, but sitting at the back of the room, taking careful notes. If you would like to know more about NACD’s Board Leadership Fellowships, educating directors to be exemplary board members, please contact fellowships@NACDonline.org and check out upcoming Director education courses here.