So, you want to be a director?

What does it take to be a successful company director? And are you cut out for the role? Management asked two experienced directors to outline their personal journey to the governance table, what being a director means to them and what a board is seeking when appointing a new director.

For American Jonathan Mason the desire to take on governance roles stemmed from an executive role he held in the United States some years earlier where, when he was newly into the job, one facility had to close with 150 jobs being lost. He asked the operations manager why this particular facility became uncompetitive?   

The manager took him through all the poor management decisions that had been made and had led to the point where the facility was to close.

“That illustrated to me the decisions we, as executives, make –  they matter and not just to the shareholders.”

 “That event meant that from then on the decisions I made weren’t just to make me a successful executive but a good decision is creating more stability, a more profitable company for shareholders, a better environment for employees and their families and an environment for growth.”

He felt that if he was a good director and sweated the details it enhanced shareholder returns, protected all stakeholders and meant better things for most employees, for the communities they work in and for the country as a whole.

In essence, he says, as a director he works for shareholders and all the families of the workers in the companies on the boards he sits on. “I have the ability to make all their lives a little better.”

Mason, who is 59, came to New Zealand when he joined Carter Holt Harvey as its CFO in 2000. After five years in that role he went back to US to the Cabot Corporation and then returned to New Zealand in 2009 where he was Fonterra Cooperative’s CFO until 2013.

He currently sits on the board of five companies: Air New Zealand, Vector, Zespri, Westpac and NZ Asset Management. He is adjunct professor of management at the University of Auckland and is also studying New Zealand economic history there.

He took on the economic history degree marrying a life-long interest in history in general and his own expertise and knowledge of business and finance. He’s very excited to be taking on a dissertation on Rogernomics, how it happened and why.

He says the irony of studying economic history is that it makes him a better director in understanding how economic mistakes were made by very smart, successful policy makers and bringing a sense of humility and healthy scepticism to key board decisions. Just because we’re smart and successful doesn’t mean that we always make good decisions.  

For Mark Cross, who is 50 years old, a move into governance was not something he had considered when he and his family moved back to New Zealand after 12 years offshore where he was working as an investment banker. He had thought it was something people did later in life, but the chance arose to join the board of a superannuation trustee company and that, soon followed by his first listed company board appointment (Argosy Property), he says, whetted his appetite. It was his first governance role and he was 42.

At that point he felt this was something he wanted to do more of and he enjoys the diversity of the different roles he has and the interaction with high calibre people.

Most of his directorships have come from formal processes run by search firms, which Cross says is more prevalent now with listed companies rather than the days of shoulder tapping. Most boards go through a much more structured process starting by identifying where the skill gaps on the board lie.

He currently sits on the boards of listed companies Genesis, Z Energy, Chorus and Argosy Property and is chairman of Milford Asset Management and MFL Mutual Fund Limited/Superannuation Investments. 

As well as the boards he sits on, other positions have come up which he has turned down, saying you need to be selective at what you take on.

Directorships, he says, are like a tattoo, easy to get but difficult to remove and you need to be prepared to commit at least three to six years once you are on a board. And once appointed you will forever have your name attached to that company.

“If things go wrong it can be a liability and reputational risk.” While being a director in tough times for a company probably makes you a better director, there is a fine line between benefitting from that experience, and gaining that experience because you were part of a board that led to the troubles occurring in the first place.

Mason says that while established and larger companies have access to experienced directors many smaller companies do not have this access. He says a smaller company can be more work, lower fees and more risks for a director.

With a new company there is the chance it won’t succeed and in New Zealand if you are associated with a failed startup – it is not necessarily good for your reputation.

He understands that in Silicon Valley it’s a badge of honour to have been associated with a mix of successful and unsuccessful start-ups and directors are seen as learning a lot from the failures.

Cross feels New Zealand does suffer a bit from its small size and fewer degrees of separation so it is important to be selective about what you take on and this is particularly true for new or aspiring directors. The temptation might be to jump on board, but it can be wiser to say no, if something doesn’t feel right. And you need to have a genuine interest in that industry or company and believe you can make a contribution to it.

If you don’t have a genuine interest, are you going to go that extra mile? He also points to the personal motivation to continue to improve as a director, and to believe that you are making a difference as an individual on the board, and as part of a collective that makes a difference to the company and to the wider community it serves and the wider stakeholder base.

What does Mason get from being a director on a personal level?

I get to engage with lot of smart people,” he says and being a director is different from being an executive.

“We are usually not driving the decisions but are reviewing the decisions. Sometimes we might send an exec back to think again, but it is usually an advisory position. For well-run companies, directors test assumptions and make sure the big decisions are thought through.”

And he says this advisory role is very satisfactory because of the quality of the executives.

So what advice would he give to senior leaders wanting to move into a director role?

“If you go back and look, do you have a life plan? Over the course of your career what mixture of pleasure and purpose do you want in your life? And are you saving enough to achieve that? Is your financial plan in sync with your life plan? 

“And could being a director enhance that plan – both the life plan and the financial plan?”

Then he says it is working out what company or not-for-profit that you are passionate about and that you think you can help in a way that others can’t.

He warns it’s a marathon not a sprint and it takes a while to get the right directorship.

He says one of his own goals was to not be in full time employment while his children were still at home. He made the move from full time executive when they were 10 and 13 years old. And he made that plan 20 years ago.

As to what skills are of value to a board, Cross says the attributes you want your fellow board members to have are: 

  1. Diligence. There is no substitute for putting in the hard work and turning up well prepared, beyond just reading the board papers, but having thought deeply and read around the topic. 
  2. Being inquisitive and interested in asking questions. Taking time to research and look into things that will impact in the longer term.
  3. The ability to both challenge and support the management at different times. A good director has the knack of developing a rapport with the executives, but not getting too close, and has the ability to challenge them on the hard issues but also to support them. Management know and trust them and while they will sometimes get a grilling they will also get board support and help.
  4. Diversity of thinking. While directors may have an area of clear expertise such as finance, marketing or technology it is good to question in areas where you are not the expert. With increasing emphasis on directors bringing a particular set of skills to the table, there is a risk of over-emphasising narrow skill sets and you need people interested in and able to contribute on all aspects of the business.

As to his advice to aspiring directors, Cross says firstly think about what your ideal board portfolio might look like, whether listed companies, private, not-for-profit, government entities or a mix of these. And think about how you want to be known as a director, what’s your elevator pitch? Are you positioning yourself as an industry expert, a digital expert, corporate finance expert? Be very clear in your own mind on this.

Then engage with the sources of board roles such as existing chairs and directors, executive search companies, Institute of Directors, specific board consultants and make yourself known to them. It’s about being known to chairs, directors and the gatekeepers. 

He says it is both easier and harder to get on boards, than it used to be.  Easier because the old boys’ network isn’t so prevalent but harder too because unless you do fit the exact skills wanted to fill a vacancy, you will not be considered.

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