This caution about taking on responsibilities at other companies—where the time commitment involved with board membership in some cases has tripled, particularly for the very positions CFOs are being sought to fill: audit-committee directorships—reflects the greater demand on CFOs at their own corporations, of course. And liability concerns have also increased. Says Tim Walsh, president of Audit Committee Advisors, a Greenville, South Carolina, consulting firm: “I’ve heard lawyers say that accepting such assignments is like putting a target on your back. Who’d want to do it?”
Still, CFOs who currently serve on other companies’ boards generally say the experience is worth the extra time and risk. “I encourage CFOs to do it,” says Don Barger, CFO at Overland Park, Kansas-based Yellow Roadway Corp., who also serves as chair of the audit committee on the boards of Quanex Corp. and Gardner Denver Inc. “You benefit enormously from seeing how other companies operate.”
Even those who are enthusiastic about the opportunity to fill a critical role in the new order of governance caution that today’s environment requires candidates to do serious advance homework about the board they are considering joining, as well as about the company itself.
And expect due diligence to cut both ways. Debra Smithart, a former CFO at restaurant operator Brinker International, and now an audit-committee member at Denny’s Corp., says that companies are looking more carefully than ever at prospective board members. Background checks and even credit checks are not uncommon, she says, and companies not only want to verify a candidate’s character but also make sure that he or she is a proper fit with their culture. Some companies now ask candidates to undergo such assessments as the Myers-Briggs personality test, or even to meet with an industrial psychologist.
“Being on a company’s board is no longer viewed as a perk,” says Smithart, “but as a serious duty that requires a substantial commitment of time and energy.”
A Preboarding Checklist
Things to consider before accepting that directorship.
- Avoid companies wanting only your financial expertise rather than all your talents.
- Look for a board that’s “engaged,” without being “overly hands-on.”
- Check current-member biographies—including average age and tenure—for hints on board dynamics.
- Talk to the newest members and ask what sort of orientation they underwent.
- Look at prereadings and agendas for several board and audit-committee meetings.
- Ask the CEO and CFO how the board adds value, what its chemistry is like, and how it could be more effective.
Source: Mercer Delta Consulting LLC