I have written before about the 3 types of boards that are commonly available to those who seek to serve on a board. I previously wrote about Government Boards and Committees. Today I want to focus on boards in the Commercial Sector and the different strategies and tactics required to gain an appointment.
5 Different Types of Boards in the Commercial Sector
There are 5 different types of boards within the commercial sector, which is likely to be attractive to many of you looking for a board role.
- Non-Executive Boards
- Family Boards
- Advisory Boards
- Investment or Equity Boards
- Start-Up Advisory Boards
Each one of these types of boards requires different skills and levels of commitment
1. Non-Executive Boards
Non-Executive Boards are the ones that people think of when they think about board work. These are the most common board roles in the commercial sector and the roles most people think of. These boards usually belong to well established companies.
Traditionally they require a commitment of one day a month and take the form of a ½ day board meeting. Though in reality, the time commitment might grow to something like 2 days a month when you factor in the inevitable Tuesday afternoon emergency that is bound to occur.
In the case of a non-executive board, there is also a strong likelihood of your involvement in a subcommittee – audit and risk, remuneration, marketing or governance committees, for example.
2. Family Boards
The next board category in the commercial sector that you should look at, are family boards. Family boards often want independent directors or Chairs to come on board to present different perspectives or to help redefine the purpose of the organisation. The time commitment is likely to be similar to that of a traditional non-executive board.
People have described working on family boards as requiring a particular skill set and even like herding cats. Small p political skills are paramount here as you will be working with board members who have a historical, personal and financial involvement with the organisation. As such, emotions run high and any new independent perspective that challenges the status quo might be viewed as invasionary and leave the independent member vulnerable to critique.
3. Advisory Boards
Advisory boards have a specific purpose and are often used by organisations to either:
- test the water before engaging a full non-executive board or
- deal with a particular issue that the organisation is facing.
Typical uses for advisory boards include:
- developing new products;
- breaking into new markets;
- tackling financial issues/change or
- driving overall performance and accountability of the executive.
In either case, Advisory Boards members are often engaged for a set period of time – say 6 months or a year.
4. Investment or Equity Boards
Organisations of all different shapes and sizes require the services of a board and board members. For example, there are: committees, advisory boards, sub-committees, independent directors, non-executive directors, etc. However, not all board opportunities are created equal and some are just plainly not board roles – despite what they might be promoted as.
It is the value add directors that I want to raise your attention to, as there is an increasingly disturbing trend of which often falls into the category of investment or equity boards. I have written extensively about these kinds of boards in my article Beware the Bait & Switch. You really should read it, if you haven’t already. In summary, these sorts of opportunities are often misleadingly advertised as Value Add Directors, while they are in fact nothing more than mere capital raising exercises.
There are some consultancies in the market place who appear to advertise board vacancies (value add directors) when, in reality, they are capital raising for their clients. These are not true board roles, nor are they paid (at least not in the traditional sense) and often not even voluntary! Unfortunately, this is not an uncommon situation.
These sorts of organisations ask prospective board candidates to invest their personal cash as a precondition to becoming a board director – often once they have wasted your time in interviews and applications. Once this occurs, it then becomes a different proposition. You are no longer applying for a board role; instead you are considering an investment. You need to analyse the opportunity for its investment merit, not as a potential director – regardless of how attractive it might be.
I strongly advise that you should not invest in any organisation in order to sit on the board and even if you do, you should not consider it as a way to advance you board career.
5. Start-Up Advisory Boards
Traditionally, start-up companies utilise the expertise of advisory boards to grow or launch a business. Unlike those practicing bait and switch techniques like I have written about above, these organisations are upfront as to what they require from you and might offer equity as a reward for involvement on their boards.
However, because they are task focused and resource poor, these organisations will often want to milk everything they can from board members who are often appointed because of their executive skills, connections and understanding of the industry. Should you be appointed to one of these boards, you could expect to get your hands dirty in the operations of the organisation. They will want access to your connections and expect you to provide practical perspectives for how the organisation can tackle the challenges it faces.
Like investment boards, these sorts of opportunities are more akin to investment opportunities than traditional NED roles. They are not going to carry the same gravitas from a career development perspective – though they can be lots of fun and provide exciting, though risky, financial opportunities.
So how do you get appointed?
Regardless of the sort of commercial board you are interested in targeting you must do just that – target it. You can not afford to be everything to everyone. Instead, you must strategically approach your search from a starting point of being explicitly clear about what it is you offer to the specific type of board you want to be appointed to. From here you need to understand your potential role and the requirements made of you if appointed. For example, a traditional NED board will often focus on governance and risk skills, whereas a start-up might want your connections and expertise or a family business might want more political skills and breadth of knowledge.
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About the Author
David Schwarz is CEO & Founder of Board Direction – Australia’s leading board advertising and non-executive career support firm. He has over a decade of experience of putting people on boards as an international headhunter and a non-executive recruiter and has interviewed over one thousand non-executives and placed hundreds into some of the most significant public, private and NFP roles in the world. He has been described as Australia’s leading board recruitment expert, is a published author, a regular speaker on the board appointment process and runs Board Search Masterclasses across Australia. He is one of Australia’s Top 10 LinkedIn users with over 26,000 connections. Email: [email protected]