How managers move from executive roles to board director

Julian: But, ultimately, your goal is to have engagements with the board that build confidence. From the board in you, but also you in in the role and wisdom of the board. That often starts in making sure that the papers in which you present to the board are good quality.
Jimmy: Welcome back to this week's episode of The High Performance Leader, the podcast for leaders working in complex, challenging environments to gain insights and ideas which help you increase your impact without burning out and to help you build a high-performance culture in your team. I'm your host, Jimmy Burroughes. And if you're new to The High Performance Leader, make sure you subscribe or follow so you don't miss any of our upcoming episodes before you put down your device.
Jimmy: Hello and welcome back to this week's episode and I'm joined by long-time colleague and somebody who I am thrilled to have invited onto The Ways of Working podcast this week, Julian Smith. Now, Julian is an independent professional director. He has 14 years' governance experience having retired from his executive career in 2019 where he was the chief customer officer for Meridian Energy in New Zealand. He's now a chartered member of the Institute of Directors and the chair of the Northern branch and he sits on a number of boards in New Zealand. So, no better person to talk about the topic of governance today. Julian, welcome to the show.
Julian: Good morning. Nice to see you.
Jimmy: And, now, Julian, probably the most obvious question and where we'll start is what is governance?
Julian: Oh, yeah. Re- Really good question. Well, I think at its simplest, governance really is um thinking about the strategic issues and the long-term sustainable health of an organisation rather than the day-to-day operational components of running a business. And and much of good governance is about holding the executive to account to ensure that they're delivering on the objectives for the shareholders and the stakeholders of the business. But also working with the executive in partnership to create the strategic road map for the organisation. To ensure compliance in the business is what it needs to be to meet um regulatory requirements. But, most importantly, I think governance is as much about setting the culture of the organisation. And and how the organisation behaves, uh operates, and leads itself in a pretty complex environment for most businesses.
Jimmy: You know, that's interesting because one of us works in the world of high-performance cultures and you're talking and saying that governance is something to do with culture, as well. So, how does that overlap work? How does the way we lead and run the business impact the culture from a governance perspective?
Julian: Yeah, good question. And I think um, if if you're an executive working with a board um or in a business that has a board, my observation as an executive who was in that space, but now as a board member, often there can be a degree of tension or frustration between the executive and the board. Often an executive might be challenged or kind of irritated or frustrated by the board. And that's a good sign that there isn't cultural alignment. If you think about, I guess, governance education, and if you do the sort of learning and development and professional development work to be a professional director, uh you learn quite quickly that culture starts at the top of the organisation. So, the quality of the relationship between the board and the executive team, the chair and the CEO, how the board conducts itself in board meetings, the team dynamic, the respect, the challenge that operates within that environment is really sort of sets the tone for the rest of the organisation. So, the way in which uh a board holds itself, carries itself, and operates has casts a very, very long shadow. And boards are very focused on uh the engagement of people that work in the business. Do they have a sense of belonging? Is there a sense of purpose? Is there a belief in the mission of the business? And that, in my view, is all all intrinsically linked into culture.
Jimmy: So interesting hearing what you're saying and just drawing some of those links between the people side of the business and the business side of the business, the commercial side of the business. And what I'm hearing is that if a board is doing its job correctly, not only is the business performing from a commercial aspect, but there really is that high engagement, good leadership, good people management happening and that starts right at the top.
Julian: It absolutely does and one of the kind of key metrics that a board will be monitoring quite closely is the health of the workforce. Uh from health and safety, which is critical, uh mental well-being, how engaged they are, attrition levels. Those are all kind of critical metrics that boards track very, very closely. And if those aren't where they should be, then there's usually quite robust conversation around the board table as to as to why that's the case, what needs to be done, and what are the executive team doing to address those issues. I mean, ultimately, at governance and being on a board, you're kind of working on the business, not in the business. And there is a very clear line between governance and management or executive. And so, as a governor, you're usually, because you come from an executive background, you're being quite careful not to sort of reach too far into the management of the organisation. Uh and that's a bit of a fluid line depending on what's going on in an organisation or the type of an organisation. But really um the board is all about holding the CEO and the executive to account to create the type of leadership environment that allows people to thrive and be engaged and do well.
Jimmy: That's somewhere I want to go a little bit deeper because I know from experience with the clients that we work with often members of the executive will have governance responsibilities in their day-to-day role. How does that, what do I call, management of of the business governance versus board-level governance, how does that differ or where are the differentiation points?
Julian: At its simplest, the board is looking at a higher level. Boards don't typically go down into a business unit performance unless there's a specific issue there that needs to be explored strategically uh, for example. So, um I think an area where boards and exec- executives often have, I guess, common governance or uh uh leadership responsibilities uh under sort of regulatory uh issues. Uh whether that's something like health and safety compliance, which is um you know, particularly in the country that I operate in, in New Zealand, is a significant um risk that boards manage very closely. And and, by um, I use the word managed deliberately because directors in New Zealand, for example, can be criminally liable for health and safety breaches. But, equally, senior executives are similarly responsible and liable. Uh different roles and responsibilities. I think ulti- ultimately the difference between governance and management is that the board is not responsible for implementing or executing an initiative or or um a a plan to change or or or or do something or to lead an organisation. Um at at its, I guess, most um impactful if a board loses confidence in the CEO, for example, or a member of the executive, then then the chair of the board often will work directly with the CEO, if it's an executive member that the board is concerned about, and then it's the CEO's responsibility to come up with a course of action. Uh or if the board loses confidence in the CEO, then the then the board will collectively make a decision as to what should be done in that space. And usually it's the chair of the board that that that implements whatever that that that plan might be.
Jimmy: And that's just super useful insights and I like those they're subtle delineations, but they are definitely there between the operational governance of maybe a project or a a program initiative versus the governance of an organisation. I'd like to dig into a little bit now the the idea of working really effectively with your board. So, most of our leaders are either on that top table or are aspiring to be on that top table. And maybe they've gone along to board meetings and they've done some presentations or whatever it might be, but if you were to give, you know, a few tips, a couple of ideas that would be maximize your effectiveness working with your board, what what would those be?
Julian: Sure. Um, I guess I would start off by just reflecting if you're an executive on, what's your perception of the board, how and how do you feel about engaging with the board? Um, so it might be that you haven't had a lot of engagement or you haven't worked with them or you haven't presented with them before, so you'll often be apprehensive or unsure as to kind of the dynamic of the boardroom and how that works. It might be that you're in front of the board all the time. Um you maybe find them annoying or irritating or just kind of a a hassle that you have to navigate on your day-to-day basis. You know, a hurdle that you need to kind of get through to be able to do your job. I think if you're coming from those places, um then I'd encourage you to think about, well, actually, what is the role of the board in my organisation? And what are they here to do and what am I here to do? Because at its, I guess, simplest and purest, the board and the executive are effectively partners, ensuring the health of the organisation. The board typically will have a much longer horizon looking at a lot much longer runway or time frame than an executive team member. But, ultimately, everyone's responsible for ensuring the health and vibrance and success of the organisation. So, I think if you're someone who finds working with your board um frustrating, or mysterious, or uh makes you anxious, then I'd encourage you to maybe just reframe those thoughts to go, "Well, the board is here to help this organisation be more successful. How can I use the board and the collective wisdom of the board to help me do my job more effectively?" So, I think that's the mindset that you have to get in. Um, I've certainly um, in my executive career, presented uh to lots of boards and have found some of those experiences pretty challenging and intimidating. Some of them very enlightening and fulfilling. And and, ultimately, as I guess my executive career evolved and I became more experienced, more comfortable in the boardroom, I I really started to value and trust the constructive debate and challenge in the boardroom. Because, ultimately, I k- I knew it meant that I would get better outcomes or I would get more wisdom to help me solve a problem or kind of move a business unit forward. So, I think having the right mindset is correct uh is the correct path. Um, secondly, I think you need to really understand what governance is and the role of the board. And you have to do think of the board as a group of complex stakeholders. You need to know who's on the board, who's the chair of the board, how they like to operate, chat with the company secretary or the CEO to really understand how that particular board or your board likes to work. Ultimately, when you can secure the confidence of the board, you're really in the perfect position. And you may often see that some of your colleagues, for example, appear to have um an easier time in the boardroom than you do, or maybe you kind of go, "Well, why does that person not get the same sort of questions that I get?" And and, generally, the answer for that is the board has confidence in that person. Th- They may well know that person more. They've seen them more. They've built a relationship, whereas they may know you less. But, ultimately, your goal is to have engagements with the board that build confidence in from the board in you, but also you in in in the role and wisdom of of the board. That often starts in making sure that the papers in which you present to the board are good quality. And I would say, on average, two-thirds of the papers I see as a board member are not at a level that I think is acceptable, generally, in terms of the quality of board papers. Uh and I think that's as an executive um, it's a very specific skill being able to write a very good board paper. And there is sort of there's no kind of place you typically go to to learn to do that. So, I think, if you're presenting or engaging with the board, understanding how board papers should be presented, the time frame for getting them in, how to pull them together, um and how to keep them succinct and short and focused, is really good use of your time. And most executives I know when they present with boards are often frustrated or challenged and and are working to the last minute to get papers in to the company secretary. If you're in that position, you're kind of not doing yourself a favour. You really want to understand the board calendar and agenda, work with the company secretary. Typically, you've probably got an internal approval process. Maybe the your colleagues, or the the legal team, or the CEO want to see those papers in draft format before they kind of go through the process of being uploaded. So, typically, if I have a board meeting, say, tomorrow, I would have received those papers at least a week ago. Sometimes I can receive, you know, 5-, 600 pages worth of content for a board meeting that I need to read. I will read all of those well in advance. I'll often have a lot of questions. Some of those questions will be technical. I may not understand the paper. I may actually need to ask for some information before the board meeting to help me understand them. That's quite often when you're common when you're new to a board. Or I might make a whole range of kind of comments uh for questions to ask during the board meeting itself. Uh, the second component is, then, well, how should you effectively conduct yourself in the board meeting? And I think I've probably got two sort of pieces of advice here. Typically, board agendas are set by the chair and the CEO and the company secretary, but they can be quite fluid. And often the board will decide on the day whether they want to expand an area or contract an area. So, you know, if it's a board day, make sure you've got lots of time in your schedule and you can be flexible in terms of, you know, when you need to be in front of the board. Secondly, let's say you've got a 30-minute slot, make sure you have absolutely no more than 10 to 15 minutes worth of content that you want to discuss or present. Uh, thirdly, under no circumstances should you start off your conversation with the board and say, "I'll take the paper as read." It just is incredibly annoying to a board member for an executive to say, "I'm going to assume you've read my paper," where like, "Yeah, of course we've read the paper. We're professional directors." Um, you you don't need to sort of go through the theatre of those sorts of kind of comments. Typically, when you say things like that, the board immediately will go, "This is a person who's not very experienced when presenting to a board." My advice is you never want to present um the paper word for word. You might have presented in a PowerPoint format. If you do that, do not go through ea- each page of the PowerPoint document. My My suggestion is uh is to present um the key points that you want to make and encourage a discussion in an area where you think the board will have some thoughts. So, for example, you might say, "Uh, thanks for having me today. I would like to discuss with you X, Y, and Z. Uh, there are kind of three key points I'd like to share with you. And then I've got a particular area where I really would welcome some input and discussion and, of course, happy to take any questions." And then you can be quite direct with the board. "Can I now draw your attention to page 167 of your board pack?" You know, and then really bring them to the area that you want to talk to. Uh and then they'll immediately you've kind of got the board doing what you want them to do and that we're all going to go to that page and then you'll talk about the key point that you want to discuss on that page. And then and then the conversation tends to be quite natural and to flow. The last component is, inevitably, a board member may ask you a question um that you don't know the answer for. It is absolutely fine to say, "Actually, I don't know the answer to that. Let me get back to you." And if there's an area that's uncomfortable or um maybe there's something that hasn't gone well that you're reporting on, just be really upfront and honest about what's going on. Uh because typically we've all been in the position where you're having to report bad news to a board and we know how hard that can be. So, the more upfront, straightforward, and honest you are, um the less defensive you will appear. And the less defensive you appear, the easier it is for the board to have confidence in you. Um, it's very common, you know, that there are incredibly complex challenges in businesses that don't have easy answers. So, I think inviting the board to help you solve those issues or problems uh is a is a good thing. Uh, the more defensive you are in your interaction with the board um and the more you try and say, "Hey, I've got that under control, nothing to look at here," um the less authentic the relationship is.
Jimmy: Just so much valuable stuff in there, Julian. Thank you. And I was listening as as you were going and trying to summarize that into some sort of core points. First one being around the idea of paying attention to where you're feeling some tension, which is a a good executive leadership trait anyway. Why am I feeling uncomfortable about this? And how can I, potentially, get some better value out of this situation to teach or or educate or or grow me? That would be amazing. Really And and there's something I think often we don't get as executives. We don't get a lot of feedback from other sources, so our board is our opportunity to get some feedback and help us learn and grow like we did earlier in our careers. I really liked that one you shared. Invest in the relationship-building piece. Get Gain their trust, gain their confidence. Uh, focus on your paper quality. Submit on time, submit good quality. Make sure you know your way around your paper. Uh, seek discussion and help direct the discussion. And and be honest, it's okay not to know. I really like those ideas in terms of how do we work better with our board?
Jimmy: Hey there, Jimmy here. I just wanted to drop in on this episode and say an enormous thank you for all of the amazing reviews and testimonials and feedback we're getting about The Ways of Working podcast. Top 10% globally and absolutely thrilled to be there bringing as much value as we can from The Ways of Working community to you, our listeners. I wanted to drop a quick note of one of the beautiful reviews that was left by JennyM49. Thank you so much, Jenny, for that kind review. Jenny says, "For those people who want to gain a practical performance edge full of practical tips in every episode, tune in here." Jenny, we really appreciate your feedback. Thank you so much. And hope that you, our listeners, will follow and subscribe using your favourite podcast platform of choice and bring every episode to share value, knowledge, and expertise from our incredible guests. Take care. Speak soon.
Julian: And follow up promptly. Like really prioritise um feedback and follow up promptly, I I think always builds confidence. Um, and a general rule, if you present 20 papers, I'm sure it can be presented in eight pages. So, um I think the challenge in presenting a good quality paper to the board is that you need to edit it ruthlessly. And, typically, I will get a 10-, 12-page document that really should only be three to four pages. And what that tells me is the executive isn't confident in exactly what the core issues are, so they're giving me everything.
Jimmy: Yeah, less less can be more in in these circumstances for sure. From experience and from watching other leaders in in play. Super useful in in how to engage with a board. Let's just switch tack slightly now and start thinking about, you know, I'm in at that stage of my career where, potentially, I'm going to the some of these board meetings and I'm maybe considering that that's somewhere I might want to head in the near near future. What would be from your experience and the work you do with the Institute of Directors, what would be a good path or some some steps that I might work through in order to set myself up for the move into a governance role, into a into a director role?
Julian: Sure. So, if you're curious about governance and whether that could be part of your career path, I think the first thing to reflect on there would be, what are you curious about? And and what is your motivation for doing that? Um, and just kind of really um just hang about in that space for a while and kind of really ask yourself the question, "What is it that is interesting me or making me curious about this?" It might be that you've worked with a board a lot and so you kind of look at the work that they're doing and that you're sort of really interested in a portfolio career where you work across a range of organisations that sort of suits your skill set, for example. It might be that you really like this idea of having a seat at the top table and getting to be involved in kind of making the kind of key decisions of an organisation. Um, I think, generally, um being a member of a board or a professional director is quite an intellectual and challenging um occupation. Um, it it A lot of the information that you gather to be effective is written down, so you have to be really comfortable being able to receive a lot of information in a written format and being able to digest that and process that. I think if you're curious about it um and you aren't working with a board on a regular basis, then I'd encourage you to reach out to somebody who is a professional director or even just um see if you can get an introduction to a member of the direct a a a director of the organisation you work for and ask if you can ask them about what it's like to be a director that you're kind of curious about it. Certainly, in almost every Western country in the world, there'll be a professional body for independent directors. Um, take yourself along to one of their events. They have many of those that sort of talk about the basics of governance and what it looks like in the introduction to governance. That'll give you a good idea of whether it is for you. Um, if your motivation is, "Hey, I can, you know, work one day a week and uh and and kind of read some stuff and make some interesting decisions, and I don't have to be in the day-to-day grind of, you know, delivering more profitability for an organisation," I'd reflect on that I'd reflect on that motivation. Typically, when you move from an executive world to a governance world, your income drops considerably. So, if your motivation your motivation can't be financial to move from the executive world to the governance world, because it just doesn't pay as well um at all, for a whole range of reasons. Um, I would If you are kind of curious, you want to dip your toe in the water, I would really explore finding a not-for-profit board that you can get a role on in an area that you're passionate about. So, it doesn't sort of matter what that board um is or the area, but something that you're personally vested in or interested in. It might be a sport. It might be an arts organisation. Might be a health-based organisation. But find something that you're interest- an area that you're interested in a not-for-profit and that's probably your easiest pathway into governance. Uh you don't necessarily have to have a lot of governance education specifically to kind of move into those not-for-profits and they can be very good learning environments. The key thing you want to focus on there is make sure that the not-for-profit you choose has a good board and it's led by an experienced chair. So, you need to do due diligence whenever you're looking at any governance opportunity, but your first one is quite critical because that's where you learn um a lot of the governance behaviours uh that will influence your governance career. So, you want to make sure you're learning from people who are exhibiting the right sort of governance behaviours and and leadership practices.
Jimmy: And and that requires a bit of due diligence in itself, right? So, you're actually asking around who who is an experienced chair? Who's a good example of a chair that I can that I can latch onto and reach out and have a conversation, potentially?
Julian: Yeah. And certainly if you're exploring an organisation, and this goes I think for any governance role, um it is an absolute expectation from the board that you will want to do due diligence about the board and the organisation before you accept a role. So, you can actually ask a lot of questions, ask to see a lot of documentation. It may require you to sign a non-disclosure agreement, but, you know, they're pretty standard and and that's pretty straightforward to do. You can certainly ask to sit in a board meeting and observe it. You can certainly ask to see previous board papers and they'll give you a really good handle on, I guess, the governance maturity of that particular organisation. Uh, and then if you're looking at um, you know, then there's a a laundry list of due diligence components you look at as a professional director to make sure the organisation's solvent, it's well funded, it's well led, it's meeting its compliance obligations, and so forth. Because there's a big um shift in your own personal risk when you start taking on governance roles uh where you can be held liable for um the the actions of an organisation. So, you really want to make sure you protect yourself by choosing and doing your own due diligence appropriately. Um, certainly, some governance roles are much riskier than others um and happy to have that conversation, but it's quite technical, but you really do need to do do your due diligence. Is this a group of people that I can work with, that I can learn from, that that I want to, you know, get involved with?
Jimmy: That's really, really helpful insights. And I want to just loop back to, you mentioned something about the the financial aspect of of becoming a director and it's not the sort of the dream cushy existence that it could potentially be portrayed as from, you know, Hollywood or or the media. Um, you mentioned something in in one of our earlier conversations around de-risking yourself, your own balance sheet. Um, can you just unpack that a little bit for us in terms of what why why do I need to think about my own finances before I go and get another job?
Julian: Yeah. So, I think if you are at that point where you're going, "I'd quite like to step into full-time governance or I would like to significantly dial back my executive work, maybe work part-time or move into some sort of consulting arrangement and move into governance," where really your income sources are changing, you really need to just have a look at your personal balance sheet and kind of go, "Can I afford to move into kind of governance?" Because um securing good-quality governance roles is a very, very long sales cycle. Uh, it can take, you know, in some cases, many years to secure a board a board position on, say, one of your target organisations that you're interested in. That's for a whole variety of reasons, but there may only be one board position that comes up every year. It might only come up every couple of years. The board will typically, every time they're recruiting a new board member, will be looking at the skills that they're losing around the board table and the skills that the board needs at that particular moment to successfully govern, and then they'll be specifically recruiting for someone with those specific skill sets. So, if you don't have those specific skills, for example, I'm not a chartered accountant, therefore, it's unlikely if the chair of audit and risk of an organisation retires or their term ends on the board that I would be considered as a likely re- replacement for that particular person. So, it's a very long sales cycle. So, your personal balance sheet is kind of critical. So, um the best advice I've ever received here is, if you have to rely on your board fees or your board income to pay bills, you are not ready to move into governance. And the reason for that is, as a director, first and foremost, you have a whole range of obligations that you need to meet from a compliance perspective uh around the the effective governing of that organisation. If, at any point, you become uncomfortable or you lose confidence in how the organisation is being governed or led, you need to be in a position where you can immediately resign from that board to protect yourself. If you're relying on the board income to pay, for example, mortgage or bills, then it's much more difficult for you to resign immediately. You never want to put yourself in a position where you have to be on a board because you're relying on the income from your board fees. So, that typically means, and that's why most senior directors typically have retired from executive life, they usually have some independent wealth behind them and they can support themselves and their families um outside of their of their board fees. That's not to say that um you don't take board roles because they um they aren't paid well. Typically, they're not paid well, to be honest, for the responsibility, but, you know, it's perfectly fine to say, "Well, yeah, I do need the income, but I've got at least six months worth of runway that I could walk away from any board role at a moment's time or a moment's notice." You just have to really have your balance sheet your personal balance sheet in in good shape before you take down the or move away or step away from an executive career.
Jimmy: I think that's really sound advice, especially the idea of if I disagree or I lose confidence in the way things are working that I can immediately step away to protect myself, but also to protect the organisation from, potentially, my skewed judgment based on a financial commitment or obligation that I might have. Yeah. Because we want to be able to do our best work. Absolutely. Julian, I mean, so many gems. I feel like we could we could literally talk for hours on this topic, but I do want to finish this up in terms of uh a couple of key questions that I I think would be useful. If there's one key takeaway that our listeners could gain from this conversation, what would you share with them?
Julian: Um that that the quality of the relationship between the executive and board is fundamental to the health of the organisation. So, ensure that, if you're an executive curious about a governance career, but also working with a board on a regular basis, really make sure that the way you approach those interactions in a way that where you say to yourself, "How can I work with this group of people, access their collective wisdom and their abilities to constructively challenge me so that I can be a better leader?" And then I think, as a board member, on the other side of the equation once you start to transition, you're really sitting there going, "How can I support this executive? How can I make sure that I can constructively challenge them, ask them questions, introduce concepts to them in a way that helps them deliver better outcomes, or gives them input to start to think about how they might approach things in a slightly different way?"
Jimmy: Fantastic. Gifts on both those little gold nuggets that we can tuck away for for future usage. Julian, thank you so much for coming on the on the show. And if people want to connect with you, find out more, reach out about the Institute of Directors or the work you do as an independent director, what what's the best way to to get in touch?
Julian: Uh, you can find me on LinkedIn. Just search um under Julian Smith and you'll find me uh at Julian Smith in New Zealand and you'll find me. Or you're welcome to email me at [email protected].
Jimmy: Fantastic. Thank you so much for sharing your wisdom, your experience, and uh a slightly different episode of The Ways of Working podcast this time round because I think it was just a an absolute opportunity to shine a different light on how we can improve business performance by the way we work with our boards, by the way we transition into boards, and the way that the boards are trying to desperately support our business and the performance as well. So, thank you for joining us. I really appreciate it.
Julian: You're very welcome.
Jimmy: That's it for this week's episode of The High Performance Leader. If you enjoyed this episode, please drop a review on whichever platform you listened on. We really appreciate it, and it helps us to connect with new listeners. Also, if you haven't already, head to jimmyburroughes.com and download a copy of my latest bestseller, Beat Burnout, Ignite Performance. It's the leader's playbook for building a high-performance culture and is packed with practical action tips to get you started. Stay tuned for next week's episode of game-changing insights and ideas on The High Performance Leader.