How to Become a Corporate Board Member: What You Should Do

Being a corporate board member has its share of great perks. Financially, it pays a lot. Board members of the 500 leading publicly traded companies in the U.S. Market, as listed in the S&P 500 Index, received a record average of $251,000 in 2012. According to Bloomberg, “the average pay for directors is almost six times the $42,700 average salary for private-sector workers holding down full-time jobs.” That’s roughly 1,789 hours of work, as opposed to the 250-300 hours rendered by board members in a year. Board members are paid big money for their insight gained from years of experience—something that not many can contribute.

Being a Board Member Means More Than Money

The benefits of being a board member goes beyond money. Becoming a board member is also an excellent way to network with and learn from industry leaders and other influential people. And of course, board membership is a badge of honor in itself. When someone receives an invitation to join a board, it means that an organization recognizes his or her expertise. Socially and professionally, board membership is quite a lucrative venture.

There used to be a time when board members were picked because of their status. Big names were popular choices because they generated buzz, giving organizations the publicity they wanted. People who had the necessary skills, experiences, and wisdom to be board members weren’t necessarily invited if they weren’t well-known enough within their industries.

Strict Requirements for Board Candidates

After the financial scandals in the early part of the millennium, it became obvious that tighter corporate governance was needed to protect the interests of shareholders. The Sarbanes-Oxley Act was passed, requiring public companies and accounting firms to adhere to stricter standards when making corporate disclosures.

As a result, organizations became more careful in choosing truly qualified board members. Also, board members are expected to take an active role in spotting and eliminating fraudulent activities. Otherwise, they have the law to answer to.

Elaine Eisenman, a founding member of Women Corporate Directors says, “the definition of qualified has significantly been altered. There are very clear regulations for independent directors regarding the credentials necessary to be a financial or compensation expert. You need to demonstrate proof in past experiences, degrees, focus, and the skill sets board members bring,”

There are many responsibilities that come with being a board member, not just anybody can be one. But if you’re a CEO, VP, or C-suite executive, you’re on the right track because you’re already working closely with the board.

Some companies don’t allow their CEOs to sit on their boards, but if your company doesn’t have that restriction, express your interest in getting a seat. If you have a good working relationship with your board’s members, chances are that they’ll be supportive of you.

If your relationship with them is not as strong as you want it to be, you can improve it by actively working with them. Electronic or virtual board meeting solutions like Convene make collaboration and communication much easier. You can use this to your advantage for your next board meeting. Share ideas, ask questions, participate in discussions—not only will these get you on board members’ radar, but they will also help you be more effective at your job.

Expert Perspectives and Advice on Becoming a Corporate Board Member

Networking

You should make connections not just within your organization, but outside as well if you want to expand your options. According to Frontier Communications CEO Maggie Wilderotter, networking plays a big role in getting tapped for a board seat.

In the past 28 years, she has served on 23 public company boards, and she attributes her success to “fishing where the fish are.” She knew she wanted to be a board member, so she took on a proactive role by getting to know CEOs and directors. She didn’t sit around and wait for the invitations to arrive—that came later on, after she had already made a reputation for herself.

For that crucial first board seat, she went cold calling industry vendors and asked them to send in proxy votes for her. She was the VP of Sales at a small vendor to cable companies at the time, so she offered representation in exchange for their votes.

Wilderotter didn’t stop there, though. After creating contacts, she made relationships with people by spending time with them and finding out what made them tick. In many ways, getting a board seat is part industry expertise, part public relations skills.

Show Leadership Skills

If you’re not a CEO, VP, or C-suite executive, it may be harder for you to become a board member. However, it’s not impossible. Wells Fargo board member Judith Runstad is a real estate lawyer who served on the boards of theaters and arts groups before she became a corporate board member.

She was handling a fundraising campaign when the recipient, Planned Parenthood, decided to offer abortions. This affected donations, but Runstad managed to appeal to local CEOs and to remind them of the other causes the community could support. The campaign ended with record success—and even Microsoft founder Bill Gates donated $100,000.

Runstad showed strong leadership skills that the corporate world noticed. She received invitations from the Federal Reserve Board of San Francisco and Safeco Corp. before joining Wells Fargo’s board. Although she started on a non-profit board, she got the exposure needed to become a viable candidate for corporate boards.

Have Financial Background

Rich and diverse background among all board members is the driver behind high-performance boards. Even though the treasurer takes care of the organization’s finances, a minimum degree of financial knowledge in other board members improves their strategy skills And it’s a significant contribution to the board as a whole.

“The best background for any board at this time is probably having a financial background and being available to sit on the audit committee,” says Eisenman.

With an adequate foundation in finance, board members can effectively analyze financial reports and statements. The board can have more productive discussions regarding mergers, acquisitions, and joint ventures.

Financial experience helps directors grasp the bigger picture regarding the company’s performance. Being able to decipher complex financial terms and documents lets the board operate more efficiently. Financially literate board members have a greater capacity to make wise investment choices.

Proper analysis and interpretation of corporate financial documents lets board members make more effective and informed short- and long-term decisions. Financial knowledge builds a strong board that can address shareholders’ expectations with satisfactory results. “If you can speak the language of money, you will be more successful,” says Richard Ruback, a professor at Harvard Business School.

If you don’t have financial acumen, you shouldn’t hold back in getting it. Participate in financial training if your company organizes those. Alternatively, you can enroll in an online class and catch up on reading reference guides on corporate finances. You can also reach out to a finance person at your company and simply ask questions and advice.

Learn the basic financial terms and concepts and try to put them to practice on your company’s balance sheets. Try to come up with various scenarios by altering where the company spends and what are the income sources.

Prove Your Expertise

To get better recognition, aspiring board members should have a record of their expertise easily available for verification online. In the times of wide-spread search-engine use, having an insightful website with expert content or publishing thought-leadership content to relevant media outlets can increase your candidacy’s value in the eyes of the nominating committee.

“The first thing a nominating committee will do is Google you,” says Susan Stautberg, president of PartnerCom, which assembles and manages international advisory boards.

Validating your expertise via available online mediums also opens up networking opportunities by attracting industry professionals to your content.

Express Your Interest in the Company’s Business

Companies look for board members who can provide actionable insight and expertise, becoming the drivers for high performance and growth.

Showing interest and the capacity to leverage your skills to further the company’s efforts and mission increases your candidacy’s chance.

It’s therefore critical to know the company’s services and products inside out to be able to provide meaningful expertise. Detailed knowledge of the competition, market trends, potential risks, and possible growth ideas will resonate with the nominating committee.

“If you have awareness and knowledge that cause you to ask great questions, that’s impressive,” says Lauren Zalaznick, full-time consultant and strategist.

By having a clear idea of how your skills and experience can contribute to improving the board’s performance, your candidacy will gain value in the eyes of the board.

To learn how your expertise could help the company, perform a due diligence check on all pertinent company  information. Read up on the company’s immediate environment and competition.

When the time for your interview comes, you should equip yourself with enough knowledge to be able to participate in a meaningful and productive conversation with the interviewees.

Garner Experience by Sitting on a Nonprofit Board

Becoming a board director of a nonprofit board is one of the best entryways for aspiring board directors. Bear in mind, however, that nonprofits usually don’t compensate directors—the participation is entirely voluntary.

Aside from filling your resume with relevant qualifications and skills that can help you later join a corporate board, sitting on a nonprofit board has the added value of working for the public good.

Nonprofits appreciate contributions in the form of expertise and donations. It’s common for many nonprofits to give board seats for significant donations. Additionally, you can become involved with a nonprofit board by simply helping with fundraising activities and campaigns. As your engagement grows, so can your chances of becoming a board of directors.

Working on a nonprofit board also allows you to get the necessary knowledge of a board’s operations and responsibilities. It can serve as a training ground and gives first-hand experience in being a board member.

Become a Board Member Through Experience

Based on the experiences of current board directors, there are many things you can do to become a board member. Network, show your leadership skills, learn financial concepts, try sitting on a nonprofit board first. Yes, the road to becoming a board member takes time and patience. However these are necessary to acquire enough experience to perform this role effectively.

Learn about the supporting technology for boards of directors as well as the structure of the board to familiarize yourself with the job.

See what digital tool, board members among other personas use within the digital boardroom.