What are the skills needed to be a board director?

Contrary to what many people think, for most boards, officially, there are no skills needed to be a board director. But there are many skills that boards and chairs look for when appointing a new board member. Whilst some skills are required by the board, others are highly regarded and having them will help you stand out from other candidates. Analyzing and identifying with these will help to determine what value you have to offer at board level. Addressing them will be invaluable during your board search and appointment journey.

What is the role of boards and their members?

In order to understand the skills needed to be a board director, you first need to know what boards and board members do.

The role of a board and its members will vary to some degree by country, organization type, industry, compliance regulations, and the organizational charter. However, from my experience working with boards for more than a decade, there are several key roles common to most boards.

These include:

• • The organization’s performance – essentially, the buck ends with the board and the strategies they implement or support.
  • Financial management and reporting – ensuring the organization is solvent, following best financial practices, keeping appropriate accounting records, and producing public financial reports if required.
  • Management performance – managing the success of key senior managers and executive directors.
  • Compliance – ensuring the organization meets all its regulatory obligations, whether structural, behavioural or financial.
  • Risk management – identify the financial, operational, cultural and reputational risks faced by the organization and ensure that all necessary measures are taken to mitigate those risks.
  • Reputation management – having an understanding of and ensuring the communication of all decisions and actions taken by the organization.
  • Culture and social impact – the board should drive a clear direction for the internal and external culture of the organization, including their social and environmental impact.

5 Skills valued by boards: considered as skills needed to be a board director

There are some valuable common or core skills that boards consider must-haves for their board members. Therefore, you too, should consider them as skills needed to be a board director. 

These skills include

Skill 1- Strategic decision-making skills
Given the far-reaching impact of the decisions made by the board on the organization and stakeholders, it is essential the board directors have strategic decision-making skills. When making decisions, they must consider the big picture, i.e. how their decisions relate to ‘stakeholders’ and the functioning framework. Stakeholders include the organization’s shareholders, creditors, employees, customers and the community in which it operates.

Board directors must be capable of making decisive decisions in a short period of time. A level of skill is also required to make these decisions within a high-pressure, often challenging, environment.

Skill 2 – Analytical skills
Analytical skills refer to the ability to research, collect and analyze information to form complex deductions. A board member with strong analytical skills can interpret data and gain the knowledge required to suggest solutions for complex problems. At the board level, they need to be able to calculate risks and understand the impact of events and decisions. Strong analytical skills also contribute to directors identifying opportunities that stimulate opportunities and growth.

Skill 3 – Adaptability
It is essential that a modern board director is adaptable on not set in their ways. They need skills to respond to changes within the industry, organization, workplace, board and also technology. Adaptability at the board level includes being able to adjust quickly to changes but also to foster and lead change management strategies for the organization.

Skill 4 – Accounting and financial literacy
Board directors need to be financially literate and, together with an understanding of the organization’s business operations, be willing to ask questions. Board directors need to be familiar with a number of financial statements, including balance sheets, income statements, cash flow statements, statements of shareholders’ equity, company interim and annual reports.

Skill 5 – Business acumen 
Business acumen refers to someone’s business sense, business savvy or business mind. At board level, this skill requires understanding various business scenarios and how to cope with them effectively. Directors with solid business acumen can better understand business issues, comprehend business operations and provide quality insight on how to achieve goals successfully.

Don’t be discouraged if you think that you do not have these skills. Many of these skills are transferable from your executive career experience. To do so, you need to focus on how you can articulate your capability in these areas at a strategic or board level. If you are lacking in any of these areas, start considering how to develop them. For example, completing a certificate or workshop in Corporate Financial Literacy.

Skills highly regarded by boards

The next set of skills I class as higher regarded in the eyes of the board and the board chair. These skills will make you more valuable at board level and more attractive to the gatekeepers who influence board appointment decisions. They will also make you a better board director and mitigate some of the risks involved in the role.

Information Technology and Cybersecurity skills
Even with the rising rates of cyber attacks, most board members are confident they understand the threat landscape, have prioritized cybersecurity and have taken sufficient action to keep their organizations safe. Unfortunately, many studies have found this not to be the case, with boards’ primary focus being the bottom line, valuing technology as an operational process that improves business. 

Most boards lack the knowledge to foresee the true impact of a cyber failure. Even more boards lack the skills and knowledge required to respond should a cyber incident occur. As a result, board directors with Information Technology and, more so, Cybersecurity skills are highly regarded. In some cases, these skills will trump some of those listed above as needed skills.

Governance training or experience
The truth is a Governance Qualification, or Governance experience is usually optional to be a board director. However, when being considered for a board role, it might just be the thing that separates you from your closest competitor. Not only are these skills valuable to the board, but the fact that you have a qualification shows that you are serious about your boar career and performance in the role.

A Governance qualification is one thing that will make you a better director, and the knowledge gained will allow you to identify and mitigate personal, professional and organizational risks. A Governance qualification is easily attainable and offered by various institutions around the world.

Networking Skills
Whether you love or hate networking, at an executive and board level, it is simply a part of doing business. Boards will look at what benefits and outside resources you can bring to the board and the organization; this includes your current and future networks and relationships.

Strategically, your networks and networking skills can provide boards with:

• • access to new financial resources,
  • access to outside knowledge and information,
  • access to potential partners,
  • promotion of the organization’s reputation.

During a board director’s tenure, he or she will have many opportunities to network with directors from other boards, current and future business partners, shareholders and stakeholders.

Bespoke skills needed to be a board director
Every board is different, as is every appointment to a board. Depending on the organization, the industry they operate, current economic events or business challenges, a board skills matrix assessment; the board may stipulate some bespoke skills required for a particular board position. Conducting thorough research and having conversations with headhunters and board members (past and present) will help you identify these bespoke skills and the weight placed on them by the board. 

In summary

When it comes to any new appointment, the board and the chair will determine the skills needed to be a board director on their board. Usually, they require a mix of skills, with some being of more value than others. Board directors are not appointed to provide just one set of skills, e.g. an accountant for their input into financial issues or a lawyer into legal issues. Aspiring board directors must be prepared by ensuring the skills and knowledge to contribute to a range of issues. 

First, identify which of the 5 skills valuable to most boards you have, plus any of those considered highly regarded. Then you need to be able to articulate your ability to practice these skills board level. Many of these skills are those that have made you successful at the executive level; you just need to be able to rebrand them at board level. Finally, these skills must be reflected in your board profile, board CV and board cover letters.