Pre-Appointment Due Diligence for a Non-Executive Director – 12 Points to Consider
In this blog, Jo Haigh, OnBoarding Officers Founder & Tutor and Serial Non-Executive Director, outlines the 12 points any NED should consider before an appointment.
It’s always wonderful when you get offered a post, I know I’m always flattered, even after sitting on 40+ boards over my career. But before you start negotiating any terms or opening the celebratory bubbles, this is the time to pause and ask a few salient questions.
- Firstly, this for me is one of the most important. Do the board’s values align with yours, in other words, are your real-world beliefs similar? If not, I guarantee you, it won’t work.
- Is the firm’s appetite for risk similar to yours? Any major differences will cause problems later.
- Have you met the rest of the board do you like them? Yes, like them. They don’t have to be your best friends but you do need to be able to get on and have straight conversations.
- Have you checked they are up to date accounts and any covenants that they need to adhere to and are you comfortable? This doesn’t mean the business is necessarily very healthy finance wise but you need to be aware of its status so you can make an informed decision.
- Have you discussed their business plans and strategy and do you feel you can add value to enhance it?
- If you are taking shares, have you looked at the shareholders’ agreement?
- Read the last 6 months board minutes and be comfortable that these are board meetings and not management meetings.
- Understand your commitment and sense check, have you got the time to support the company? However long they have asked you to commit, bear in mind it will be easily double.
- Meet the senior leadership team and get a sense of their interface with the board.
- Visit the shop floor be that a factory or an office or a retail outlet or it’s an online business do “a mystery shop”.
- Ask the CEO what are the biggest challenges the business is facing and then ask yourself how you can add value.
- And finally, ask why there is this vacancy and why they think you may be the right person to fill it.
