A good board fit happens when you find a position that matches your values, skills, time required, availability and interests. With a good fit, you can have a productive and fulfilling board experience. There are different types of boards, different organisational structures, and wide variances in compensation, from zero to significant. As you start to plan your board career, it is important to understand these differences, so that you can determine where you are best matched initially and how your board career can expand and progress from there. It is also helpful to create a plan for the type of diversified board portfolio that you wish to build. Think about the different skills and experiences that you are able to commercialize and how you can balance risk across your board portfolio. For example, you might have two to three board roles that generate income; you might have one or two roles that you do voluntarily; you might do some consulting or coaching work, and; you might own shares or have a property portfolio — or some other investments that generate income. You might also plan to continue with an executive role, do paid speaking engagements, write books, provide mentoring or coaching, or run a consultancy.
The Different Types of Board Leadership Opportunities
There are different types of boards that vary in time commitment, responsibilities, challenges, and compensation. What you will discover is that some types of boards are stepping stones to more prominent board opportunities as you develop your board career and portfolio. Organisations range from small or local to international (or somewhere in between), private or publicly traded, and well-established companies to the ever-intriguing early stage high-potential ventures. There are also thousands of government boards, trusts, and committees that require board members – at every level of government. In other words, there are multiple types of opportunities to find a board that interests you and would benefit from your experience and insights.
Board Roles & Functions
Depending on the type of organisation, their legal structure, and their positioning – there will likely be at least one of four functional roles you may serve. These are:
- Volunteer (example: Not-for-Profit charity)
- Investment (example: start-up, early-stage company)
- Advisory (example: local manufacturer)
- Paid board member (example: publicly traded company)
An Advisory board usually does not have any specific organisational authority. Instead it functions to advise a person or organisation. Advisory board members contribute insight, expertise, and industry perspective. Advisory boards are especially important to start-ups and nonprofits, since they can provide invaluable guidance.
Fundraising & Not-Profit Board & Volunteer Boards
A Fundraising, Not-For-Profit, or Volunteer board may or may not have governance over the organisation’s decisions. However, these boards function to harness the members’ connections, ideas, and circles of influence to raise funds for the organisation. They may also provide guidance in managing the organisation’s volunteers, donations, and other resources.
Policy boards help to create governing policies for an organisation. These policies are then the guidelines and direction for an organisation’s executives to follow.
These boards are also called Managing boards since they function to manage the day-to-day decisions of the organisation and coordinate operations in-line with the organisation’s objectives and purpose.
These are common in smaller Organisations and community groups that may have limited resources. These board members do double duty as staff and board member.
These board members are involved in providing the authority and direction that drives an organisation. They provide the direction for the focus and future of an organisation for the executive staff.
Private boards can come in a variety of forms from small Organisations to very large up-and-coming start-ups. Compensation can also range from financial to stock options/equity in the organisation.
A Public Board is often associated with enhanced potential for compensation. These boards also involve greater fiduciary responsibilities and risks. There may also be geographically specific legal guidelines that board members must comply with.
Joining Not-For-Profits Boards
As you start your board career you are most likely going to start with an advisory board role in a small private business or an early stage high potential business. Alternatively you may also secure a role in a Not-For-Profit organisation. The reality is that when you look at high profile board directors there are very few that have not served time in these areas helping an early stage business or assisting a NFP board. As you will discover, there are some pros and cons of these style of board appointments. Many people have goals of serving on a corporate board, which makes sense because this offers a wide range of benefits. Their initial perception is that an NFP board might be a board career setback or waste of their time. However, serving on an NFP board provides invaluable board experience, while allowing you to impact the community or important social Organisations.
The Benefits of Not-For-Profit Boards
It provides for excellent networking opportunities: You might be surprised at just how many contacts you can gain through a community-based board. You’ll be connected to an instant network of other board directors – who invariably will be serving on other boards. The network you create from serving on an NFP board will be extremely important to your future board career. A quality not for profit organisation will invariably have several high calibre, and experienced board members serving. As a first role, this offers a fantastic opportunity to learn. Like in any new career – those that have served on boards for many years will have experience that you can benefit from. Before joining a not for profit, take a look at the calibre of the other directors serving, and make sure that there are other board directors who you can learn from.
It looks good on your resume and helps with your overall career path: Time spent on a NFP board can show that you have both corporate experience as well as non-profit community experience. It shows your depth and breadth of experience and that goes a long way with escalating your career. Any experience gained through this position serves you well in the long term.
You can truly get the chance to be a part of your community: There is great value in being part of your local community. You get to play an important role in the way that things are done and you can see the fruits of your labour. You get to help make decisions that can positively affect the people of your own community. You live in this community, you work within it, and therefore being a part of the way that it is run by serving on a board can be a very rewarding experience overall.
It gives you experience beyond the corporate boardroom: Non-profits have an entirely different approach and way of doing things, and it gives you great exposure to different perspectives and thinking. It can really help to shape you into a well-rounded individual with experience that you couldn’t possibly get elsewhere. It may be a stepping stone or it may transform into something that you are committed to in the long term.
Joining Start-up Boards
Many experienced senior executives and active board members are now being regularly approached with requests to join early-stage start-up company boards. If you are considering joining the board of a start-up business, here are some things to keep in mind.
When joining a start-up board, it will be an investment in time and often money: With a start-up organisation, you can expect greater demands on your time and energy since these organisations are in their highly unpredictable growth phase. They are still defining their business goals and methods of measuring and evaluating their successes. Board members may be expected to settle disputes, track company finances, or reach out to an established network. Board members are expected to participate fully in the growth-related activities of the business. Shareholders and senior management might still be figuring out their authority, roles, and responsibilities. It’s common that early stage organisations often have challenging issues to manage – and being flexible, and a good communicator will be extremely important.
There could potentially be financial problems as well as involvement in legal affairs: It is important to keep personal liability protection in mind should you decide to join a start-up company board. It is also important that you are intimately familiar with the organisation’s financial position, cash-burn rate, overall financial position, and tax filings. Securing your own personal Directors and Officers insurance can be a good starting point to mitigating any related risk exposure.
Greater uncertainty about the future: As the numbers show, there are high rates of failure for new start-up businesses. The success rate for first-time entrepreneurs sits at around 18%. While company boards are created as a guiding force, there are also increased chances of the company not lasting long, due to many variables.
There are also a number of Pros related to joining a Start-up Board. These include:
Being Part of a Young Organisation: Start-ups value diverse opinions and are more open to suggestions for improvement. Board members can find interesting ways to apply their wealth of experience, knowing that senior management is deeply cognizant of the benefits of a board.
Expanding and Connecting with Networks: While each board member is likely to have an established network of high quality professional connections, interacting with people from different industries with varying levels of knowledge can broaden those linkages. You can gain contacts such as potential business partners, clients, managers, and vendors.
Opportunity for Additional Income: While start-up company boards might not be able to pay much in terms of cash remuneration, an equity position is possible and they do have opportunities with compensation when looking for highly experienced and qualified individuals who will closely match the skills required. It is good to approach a possible board position with realistic expectations of paid-board seats based on your background and professional expertise.
A key aspect when considering a board position at a start-up company is to check whether your values and goals are well aligned with the organisation’s mission and long-term goals. A great way of doing more due diligence is to arrange to meet with other board members prior to accepting the role.
As you may now realize, there are several types of board member opportunities available at various types of profit and non-profit entities. Each of these organisations present specific challenges that may interests you. “Do your homework” and discover as much about the organisation and other board members as you can. If you take the time to evaluate and learn about all aspects of an opportunity, you are more likely to choose board positions that will enhance your life, experiences, as well as your career path.
Check out eBook Welcome to the Boardroom: The Step-by-Step Strategy for Launching Your Board Career, available via Amazon Australia. Director Institute members have access to one-on-one advice, mentoring, peer-to-peer education and business networking opportunities as well as exclusive board opportunities available no-where else in the market. Visit our website for more information.