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 on a board of directors. However, there are many skills that boards and chairs look for when appointing a new board member. While each board will mandate some required skills such as financial management, effective communication and critical thinking, others are always highly regarded, and having them will help you stand out from other candidates. Analyzing and identifying these skills will help determine your value at board level. Addressing them will be invaluable during your board search and appointment journey.

What is the role of boards and their members?

First, you must understand what boards and board members do to understand the skills needed to be a board director.

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

These include:

• • The organization’s performance – essentially, the buck ends with the board and the strategies it implements or supports.
  • 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 – involves identifying the organization’s financial, operational, cultural, and reputational and ensuring that all necessary measures are taken to mitigate those risks.
  • Reputation management – understanding and ensuring the communication of all decisions and actions taken by the board and the organization.
  • Culture and social impact – the board must establish a definitive direction for the organization’s internal and external culture, encompassing its social and environmental impact.

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

Even though board composition will be unique to every organization, there are some valuable common or core skills that boards consider must-haves for their board members. Therefore, you 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 board’s actions on the organization and its stakeholders, it is essential for directors have strategic decision-making skills. When making decisions, they must consider the big picture—specifically, how their choices impact stakeholders and align with the organization’s operational 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 and well-informed choices, even under tight time constraints. This requires a high level of expertise to navigate complex, high-pressure, and often challenging environments effectively.

Skill 2 – Analytical skills

Analytical skills refer to the ability to research, collect and analyze information to make 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 help directors to identify opportunities that stimulate growth.

Skill 3 – Adaptability

It is essential that a modern board director be adaptable and not set in their ways. They need skills to respond to changes within the industry, organization, workplace, board and technology. Adaptability at the board level includes adjusting quickly to changes and fostering change management strategies for the organization.

Skill 4 – Accounting and financial literacy

Board directors need to be financially literate, understand the organization’s business operations, and be willing to ask questions. They should also be familiar with several 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 highly 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, unfortunately, many boards are confident they understand the threat landscape, have prioritized cybersecurity and have taken sufficient action to keep their organizations safe. Unfortunately, many studies and continuing examples of devastating cyberattacks highlight that this is not the case. Most boards’ primary focus remains on the bottom line, but they value technology as an operational process that improves business.

The situation is exacerbated by the fact that many boards lack the understanding necessary to anticipate the potential risks and full consequences of a cyber failure. Even more problematic, most boards lack the professional skills and knowledge required to respond should a cyber incident occur. As a result, board directors with information technology and cybersecurity skills are highly regarded. In some cases, these skills will trump some of those needed skills listed above.

Governance training or experience

The truth is that a Governance Qualification, board director training, or governance experience is usually optional for board directors. However, when being evaluated for a board role, it might just be the thing that separates you from your closest competitor. These skills are valuable to the board, and your qualification shows you are serious about your board career and performance in the role.

Governance and board director training will make you a better director. The knowledge and confidence gained will allow you to identify and mitigate personal, professional, and organizational risks. A governance qualification is easily attainable and offered by various institutions worldwide.

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.

Risk Mitigation

As mentioned earlier, risk management is a core role of all boards and those who serve on them. Failing to perform this role well can be devastating for the organization, its stakeholders and individual board members, who may be legally liable in the worst-case scenario. Boards and the chair will see any potential board members with risk identification and risk mitigation skills as a highly valued commodity.

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 at the 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.

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