By Todd Hutchison
Imagine spending your time at board meetings and getting paid well beyond the average Australian salary to do it. Very few people have built the profile and expertise to become a full-time company director, however being a director on a board can be very rewarding for the savvy business-person.
The term 'refers to an independent person who sits on the board and has no other employee-based role within the business, whereas the term 'executive' director relates to those employees who also reside on the board.
Government, not-for-profit and corporations have governing boards, although the term 'board' is largely reserved for corporations, and terms like 'Council of Management' are more prevalent in incorporated associations. Each board can be structured quite differently, with companies typically having from five to12 directors, and not-for-profits often up to 15 Council members.
Generally, the board is responsible for setting the strategic direction, establishing effective governance, evaluating performance and assuring financial sustainability for the business. Being a board director comes with common law and statutory obligations that include a duty to: act in good faith and honesty, act with care and diligence, avoid a conflict of interest, not to abuse a corporate opportunity or misuse information, and not to trade while insolvent. There can be significant personal liability for being a director where a business has gone to ruin from poor decisions linked to the board, with limited insurance safeguards available to protect your assets. Government-based board directors may enjoy extra protection under special Crown immunity clauses.
While research has indicated that the majority of board placements are done through personal associations, the traditional 'boys club' membership is fading away due to the increased legislative responsibilities. Being a major shareholder may result in a seat on the board, however a high business profile and people network can be appetising to a searching board. Shares in a company can even be sold based on the quality of the directors on the board.
To improve your odds to get on to a paying board you may consider the typical characteristics of quality board directors that may include: desirable business-qualifications, experience running businesses, leadership and human resource management experience, and time serving on boards. It is sometimes best to get experience by volunteering on a not-for-profit board and getting valuable experience while contributing to a needy charity and giving back to society.
It is highly recommended to join the Australian Institute of Company Directors to demonstrate a professional interest and commitment to the profession, and ideally complete the Diploma in Company Directorship to not only become a qualified director, but one who will become aware of the challenges and obligations of overseeing a business from the boardroom.
Todd Hutchison is the National Chairman of the Australian Project Management Institute Council, and Managing Director of People Rich Pty Ltd
www.peoplerich.com
