Show Notes

Mastering the Art of On-boarding New Board Directors

 

In this episode of the Service Game Podcast, hosted by Julie Krieger and sponsored by onsomble, the critical steps in onboarding new board directors are discussed comprehensively. Key topics include the importance of compliance, timely notification to authorizing bodies like ASIC or ACNC, and meticulous record-keeping for legal protection. The episode emphasizes thorough induction processes covering organizational history, mission, board charter, and current issues. Practical steps, such as sending welcome emails with necessary documents, scheduling meetings, updating governing bodies, and managing bank signatories, are outlined. The financial induction process is highlighted to ensure understanding of the company's financial health. Additionally, the importance of feedback, setting strong company culture, and maintaining compliance with constitutional rules are underscored. Listeners are provided with downloadable checklists and support resources, with an encouragement to engage via social media.

 

00:00 Introduction to the Service Game Podcast

00:56 Recap of Previous Episodes

01:57 Onboarding New Directors: Importance and Process

03:19 Understanding Fiduciary Responsibility

05:11 Operational vs. Strategic Boards

07:59 Compliance in the Onboarding Process

13:06 Time and Focus in Onboarding

16:12 Creating a Replicable Onboarding Process

17:57 The Role of Company Culture

18:58 The Importance of Culture in Organizations

19:19 Onboarding New Directors: A Sign of Respect

20:20 Step-by-Step Onboarding Process

20:57 Essential Documents for New Directors

22:47 Scheduling Meetings Efficiently

23:28 Pre-Board Meeting Preparations

25:02 Updating Records and Communicating Changes

27:38 Providing Access to Platforms and Systems

31:17 Financial Induction for New Directors

33:04 Seeking Feedback and Tracking Terms

35:32 Conclusion and Resources

   

Links:

www.onsomble.com.au/resources

Show transcript

 

Welcome to the Service Game Podcast brought to you by onsomble. I'm your host, Julie Krieger. For the past 14 years, I've been helping associations to grow and thrive, establishing systems, writing policies and procedures, implementing membership and sponsorship strategies, Bye. Setting up operations, undertaking complete governance restructures, developing strategies, and advising CEOs, presidents, and boards.

 

I am driven to support the hardworking people who give their time, heart, and soul in the service of their members and in the pursuit of the greater good.  Join me as we delve deep into this innovative, creative, values based and mission driven thing. I call the service game.  Let's get going with today's episode.

 

Hello, hello, and welcome to episode three of the service game podcast brought to you by onsomble. I'm Julie Krieger, and I'm delighted to be here with you this week on today's episode. Over the past few weeks, we've been talking about I'm AGMs. We've been talking about how to prepare for them, how to run them, and then follow through on all the post AGM activities with the ultimate of ease.

 

If you missed all of that information, and particularly if you've got an AGM coming up, then you'll want to skip back and have a listen to episode two. You can also check out the information on all of that that we've covered in the last week or two via our socials. And of course you can see what we've been talking about via our blog on the website, which is www.

onsomble. com. au. So I hope you found that information useful and that you've been able to implement that readily and easily into your processes.  So the AGM is done and what is the next logical step? Well, I'm glad you asked. It is to onboard your new directors. In today's episode, I will walk you through the importance of running an effective onboarding process for your new directors. We'll talk a little bit about what can happen if you don't do it well, and what are in fact the key steps in that process. So let's get going.   Firstly, what does it mean to onboard a director? Simply, It is to induct them into your board. So to induct someone is to formally admit them into a post or an organisation. By definition, that's what it is a bit like earning a Hollywood Walk of Fame star. Except that a board induction is a lot more than a mere welcome. It's certainly more than a ceremonial activity. And it is. More than just a formality as well.  The process is actually critical for arming your inductees, your new directors, with the tools and the information that they're going to need to properly, fully discharge their responsibilities as a director optimally.  Let's not forget. That being a director of a company brings responsibility.

 

Primarily, all directors take on what's known as fiduciary responsibility for the company on whose board they sit.  You may have heard that term before and I suspect there is some confusion out there about what it really means, but ultimately what that simply means is that is that the directors take the responsibility to take care of the finances entrusted by the members, the finances of the organisation that are contributed, let's face it, predominantly by the members, and the members of course, are the people who ultimately own the organisation,  depending on your corporate structure, of course.  But moreover, the fiduciary responsibility requires directors to put the best interests of the organisation for whom they are a director at the forefront of their minds and their actions.

 

So fiduciary responsibility is more than just a financial obligation to make sure that the company trades solvently. That's obviously an imperative of the directors as well as the management team, but more so it really is this concept that the directors have a responsibility to the members to put the interests of the organisation and of the membership first in what they do.  So directors have an obligation to set the strategic direction of the company, to understand and to take steps to mitigate risk that the company might face, and to ensure the financial stability And ultimately the solvency of the organisation and of course to trade as an insolvent organisation is problematic in the extreme, I think it's fair to say.

 

Some boards of course sit purely at this higher more strategic level while others can become more operational. And that's especially true in the smaller scale not for profit association space where we often see boards having Director responsibilities for particular portfolios or areas of the operation of the organisation.

 

You might, for example, find directors have a responsibility to coordinate the annual conference or scientific meeting or the finances or the. educational activity or the membership benefits activity, whatever it might be, those sorts of boards are not uncommon in the small and not for profit space. And that's a different set of responsibilities, of course, because it is much less about strategic direction, much more about day to day, week by week, month by month, all that.

 

Operational activity and making sure that the company continues to have an offering.  In the larger organisations or those that might have a bit more money in the bank or be at different stage of their evolution, that's often not the case. And in those boards, they are a strategic board as opposed to an operational board.

 

Even in the smaller organisations where the board might be more operational,  the operations are not  to take the place of the strategic work and the risk management work and the fiduciary responsibility side of things.

 

They are absolutely in addition to. So all boards must do this high level work of strategy development and management, the risk management work, and the financial stability and security work. The buck stops with the board.  So you can see that it's pretty important that in bringing new directors into the organisation, those directors have.

 

A fighting chance to do their absolute best for the organisation in their directorship. And that kicks off with the process of arming the new directors with a thorough briefing and getting them set up to be able to access the people and the information that they need to access in order to undertake their role well.

 

It's about setting really clear expectations around  their effort and their contribution. And that's key to enabling and empowering the new directors.  So this is the key point of the induction or onboarding process.

 

Okay, then what makes a good induction process?  Well, firstly, you're going to have compliance issues. I know we talked a lot about this When I was talking about the AGM process and compliance, just  is an unavoidable reality of sitting on a board. You must adhere to your obligations, no matter where they sit or to whom you are responsible,  you've got to be compliant.

 

So there are certain things in the onboarding or induction process that must be done in order to ensure compliance.  And in compliance, I'm talking about compliance with your own constitution, compliance with the legislation that governs  your organisation. So that might, for example, be the Corporations Act if you're a company limited by guarantee in Australia,  or it might be some other  legislative body in your own jurisdiction.

 

And you also have to comply with the requirements of your governing entity, such as, for example, ASIC or the ACNC if you're registered as a charity. And again, I'm talking about the Australian environment.  So compliance with your constitution, with legislation, and with the governing authority. that is relevant to you and your entity.

 

Within your constitution, you will find all of the elements around election or appointment of directors. And we covered that a lot in the previous episode when we were talking about the AGM process and the process of electing people onto your board. So I won't go through that again. Suffice to say.  You need to follow the terms of your constitution when you're appointing new directors.

 

Secondly, in Australia,  all directors must obtain a director ID number before they join a board.  It's an obligation now and it's really easy to get. There's a website that you can go to with some links and you click them and within literally a few minutes each director can have their own director ID. Now that ID number stays with the person no matter what board they might sit on. How long they're there, where they then move to, whatever.

 

They need only apply once for a director ID number, and that director ID number travels with them for any board they might sit on. So  it's not in any way linked to the organisation that the person is a director of.

 

You must also, from a compliance point of view,  organise the collection of your director's details, and then the storage, safe storage obviously of those details  and included in that will be a consent to act form where you get the written and signed  confirmation from your new director  that they have agreed to join your board and that they agree to the terms and conditions and the compliance structures under which they must operate.

 

As a director. So that's pretty important. And we've got a template for that in our kit that will help you out.  Once on board, of course, you need to notify and update the records within your authorizing body. So ASIC, for example, or the ACNC.  And usually that's required within 28 days of that director being appointed.

 

Why is that important?  And why is it important that we note specifically the exact date on which a director commences or ceases  in a role as a director? And similarly, why are the minutes important? This is a little bit of a tangent that we're going on at the moment, but why are the minutes important?

 

And why do we take at every meeting  a record of who was in attendance and whether they were there for the whole meeting or whether they arrived late, left early, whatever. And the answer to both of those things is  That it's because in the event that something went wrong or were challenged from a legal point of view or the organisation got in trouble.

 

As I said, the buck stops with the board. And if a director was present, was signed on as a director and so on, then they are held responsible. If, however, a director can say, well, hold on that decision, that contentious decision to, I don't know, Sack the CEO without notice, for example,  was taken a week before I joined the board,  then that person by law has no responsibility.

 

So it's important to maintain accurate records of when people join, when people leave, the meetings they attend, the decisions that they're party to  for their own protection, as well as for that of the group and of the organisation as a whole.  So that's point number one, compliance. Point number one in what makes a good induction process.

 

Point number two is about adequate time and focus.  Your president or your chair  and your company secretary ought to be devoting an amount of time to the process of onboarding your new directors.  Those people within the scheme of your organisation hold a lot of value.  and information that will be relevant to   onboarding directors and to the directors themselves as they undertake their responsibilities.

 

And it's this time in the process where that information ought to be shared and it ought to be shared in a really full way. open way.  So that might include, for example, sharing of information on the organisation's history,  giving an overview of what the organisation is today, what it does, maybe its organisation chart,  its mission, vision, values, purpose, the functions, the key activities that it undertakes, the membership value proposition for the organisation, The various revenue streams should be outlined.

 

Any issues that are currently before the board, or something that the board will need to focus on,  key activity that the board undertakes, all of those sorts of details, form part of what is ideally a conversation, supported by documents that should already be within the filing system of the organisation.

 

Add to that the board charter. This is a perfect moment, if your organisation has one, to go through the roles and responsibilities for directors, the decision making process. delegations of authority, what the expectations are, perhaps even board performance and board evaluation, how the board goes about troubleshooting or dealing with decisions that are fraught.

 

Those sorts of things are all really important because that's how the board is going to operate. And unless each new director, as they come on board, is given The privilege of having that knowledge up front, it makes it really difficult for them to undertake their responsibility, but also to do so in a really efficient way and to do so from as early a point as possible in their directorship. If you leave them to figure stuff out for themselves, mistakes can be made, things can be missed, people can get annoyed. You can end up repeating yourself,  can become quite an inefficient process and of course it's just not helpful. It's not helpful for anyone.

 

It's not helpful for the existing board members who. are ideally in a flow and ready to make things happen for the organisation and for the members, it's certainly not helpful for any new director coming on board to be sort of flying blind as they enter this new and significant role.  So that leads us to point three in this what makes a  good induction process, and that is A clear and replicable set of steps that you can undertake for the new director today and for the new director in six weeks or  six months or a year or whenever the next director or directors come on board.

 

And that's where we've got you covered. As  you will have come to expect,  we have a checklist that you can download from our website for free.  And it is our board induction checklist. If you have a little look at onsomble. com. au slash resources, you'll find the button to click there to download that free checklist, and it goes through every step of the process that you will need to be able to effectively, efficiently, respectfully, and thoroughly onboard your new directors.  We also have in that same space on our website, a kit that you can download, a board induction  kit, this one has about four key documents that you will need and can use again and again. So that's a really simple, easy to grab plug and play. resource that I don't need to go through now in detail, but you can have a look at on the website.  So in terms of the process, we've covered compliance. We've covered the time and the focus and the information sharing process that ideally should be undertaken by your president or chair and your company secretary.

 

We've talked about having a clear and replicable set of items that you can check off a checklist as you go through to make sure that that process covers everything you need to cover every time you undertake it.  And finally,  a word on company culture.  Culture, as you would well know, is is set at the very highest levels of an organisation's structure.

 

In the case of a not for profit association, that's the board.  You will have heard, I'm sure, the expression that a fish rots from the head down.  At its worst, poor culture can destroy organisations. It can make it difficult to attract and retain staff, especially good staff. It can diminish your customer loyalty or your membership loyalty.

 

It can blow out your budgets through waste and duplication and inefficiency of activity. It can lead to churn. It can lead to poor decision making. It's really important that you aim to set the best possible culture that you can for your organisation.  Peter Drucker, the legendary management consultant out of the US. is often quoted as saying, “Culture eats strategy for breakfast, lunch, and dinner”.  And he's right. It's what makes or breaks an organisation. It is, I guess, the essence of the organisation. Getting it right, therefore, is very, very important to your success.  And taking the time at the highest levels to onboard new directors is reflective of a culture that values communication and it values the contribution of its volunteers.

 

Let's face it, most people who step onto not for profit boards are doing so in a completely voluntary capacity, in addition to their day jobs and their families and the rest of their lives, which are often very difficult. incredibly full.  So it takes time to educate and inform a new director and to do that well,  but to do it, to take that time shows respect, not just to the director and to the board, but to every stakeholder you have at every level, because it says, This is important.

 

The activity that the board undertakes is important.

 

In other words, the onboarding process is step number one in setting the culture for the whole organisation.

 

So to the process itself,  as I mentioned before, we have our free checklist, which has every step of the process listed out for you with a tick box right next to it to give you that satisfaction of clicking the button and knowing that that particular job is done. So step one here in the process is download that checklist.

 

 

 

So as to that checklist, as I said, I won't go through it in minute detail, but  I'll give you an overview.  So you're going to need to welcome on board your new director or directors,  ideally within a week of their appointment. So you'll want to get an email out to them pretty quickly and attached to that email ought to be a letter of welcome from your president or chair,  the Consent to Act letter that I spoke about a little earlier,  some information on directors responsibilities,  in addition, I would attach to that email  a copy of the company's certificate of currency for insurances.

 

In particular,  your insurance policy that covers   directors and their vulnerabilities in the role of director. So that might be your director's and officer's insurance, or in some cases it's simply called association insurance.  That will cover directors and officers as well as a range of other risks and activities.

 

And it's important to share with new directors, the fact that when they come on board to work with you, they are covered, to give them some certainty that if Things were to go pear shaped if, something happened that ended up litigious and ended up with a financial ramification.

 

It's great to know that they are covered, that there are protections in place and  It's a non negotiable to have that in place for your directors. So I think it's good practice to send a copy of that certificate to a new director to say, Hey, we value what you're doing here. We value what's on the line and we know that this is a responsibility that you're taking on, but we've got you covered.   Also in that email is a request that the new director or directors make themselves available within say two weeks to have a meeting one on one with the president or chair or with the company secretary, but ideally with the president as the head of the board.

 

I personally love to use something like Calendly which allows you to provide a link in a document that people can click to then go ahead and book an appointment directly into your calendar. It saves an awful lot of going back and forth, saying, are you available next Tuesday? Oh, well, I can do five.

 

No, I can't do five. I can only do 10. No, I can't do that, but I can do that Thursday. It just saves all of that hassle. If the other person can simply click a link, see your availability. check it against their own and go ahead and actually book a meeting. as I say, I use Calendly, but there are plenty of others out there and I'm not affiliated with any of them.

 

Prior to the first board meeting, after the appointment of the new directors, it's important to have that meeting with the president or the company secretary to give that overview of the organisation, the history, the functions, the roles, responsibilities, explain the decision making process, any. Issues that are currently outstanding, board performance, all of that information in a one on one chat, maybe over a coffee if you're in the same location just to, again, you know, reinforce that culture and that sense that the organisation places high value on the fact that this person has volunteered their time and their knowledge and taken on the risk and responsibility for the benefit of the members and of the organisation.  So set that meeting to happen prior to the first board meeting after the new director's appointment.

 

Also prior to that first board meeting after their appointment, you will want to gather up all of that paperwork. You've sent the links through in that introduction email, but you want to make sure that you get back their signed consent to act letter, which contains their director's ID number.  It will also contain all of their profile information that you'll need to be able to update  ASIC or ACNC or whatever the authorizing governing body is that you are linked to. I would also ask them in that for a a headshot and a bio so that you can then use that information to update your website.

 

Within one month of your new director joining the board,  you will need to make sure that you update the records of your organisation with your governing body, ASIC, ACNC, or your state based governing body. Again, this is all Australian based, there'll be relevant bodies within your own jurisdiction.

 

You may at that point as well, if relevant, Want to think about changing your bank signatories or bank authorities. So if the new director coming on board will become somebody who's going to authorize payments, for example, then you pretty quickly need to start that process. We could do a whole episode on the process of updating bank signatories and authorities.

 

It is one of the most difficult jobs of running an association. Not because it's actually hard, just because it's convoluted and in my experience most of the banks that I've ever had the misfortune of having to do this with have not had a really clear and transparent process. And when you seek to find information.

 

It can often be different depending on who you speak to and the day of the week, and I don't know, the weather outside, it seems. So look, I don't mean to be negative, but that process is an arduous one, and it's definitely worth starting sooner than later, particularly if you are reliant on the new director to approve payments. And that's particularly relevant if part of that payment process is anybody's payroll because you just can't be late with that. So you've got to get onto it pretty quickly.

 

You'll want to communicate to stakeholders about your new directors. If this is happening post AGM, then we've covered that. As I said, in episode two, we've gone into quite a bit of detail around that, but you'll want to be communicating via newsletter, social media, website. Any and all of these channels that you have at your disposal to let the membership know that this person has come on board as a director of the association and to share some basic information about that person, their bio, their headshot, a little bit about perhaps their aspirations for the organisation. So their skill set, what it is they want to achieve over their term, that kind of stuff. So that's good to share with your members and other stakeholders. you might also need to share that   with your sponsors, with your government contacts with related organisations.  If you're a medical society, you might need to share it with your Royal College, for example.

 

You'll also want to make sure that the new director has access to any relevant platforms or forums. that they will need to access in order to do their work.  So again, ideally within a month of their appointment, give them access to the company website. If you've got a board management portal or platform, the likes of anything from Diligent, Board Pro, Board Effect, Our Cat Herder, any of those systems, then you'll need to give them access to that and set them up fully in that to be able to see everything they need to see and have the ability to use those systems in the way they need to use them.

 

So all the right permissions.  Similarly, your file management system, whether it's Dropbox Google Drive, whatever you're using, they'll need The appropriate levels of permissions and access set up for those.   Maybe they'll need an email address. Not all directors in associations will have a specific association domain email address.

 

But if you have those, then you'll need to get that set up and ensure that the director has The access there, so the password and the login detail.  If you've got email groups already established, you'll want to make sure that you've removed any directors who are no longer directors and added in your new directors.

 

You might have a community chat forum or have WhatsApp groups. You might have social media sites that you need to update them into, not only in terms of, hey, they're here, but also do they need permissions to. Post to social media.

 

As soon as your new director has been announced to your stakeholders, it's really a good idea at that point to make sure that somebody takes the time. to go through with them all of the key documents that relate to the organisation. Now, ideally, this is probably done by your company secretary, and the key documents will include your constitution.

 

And I don't just mean send them a link or point them to where it sits in the files, but actually to run through it with them.  Not every clause or every detail, but The pertinent ones around director's responsibilities, terms, perhaps the AGM, other meetings, quorum, those kinds of key points within your constitution that will make a difference to the way they're going to be able to do their work.

 

Similarly, your board charter or your code of conduct, your delegation of authorities, your strategic plan, really important one to take the time to go through.  Also a board calendar, you'll need to make sure that they receive invites to every meeting that they will be responsible to attend. And ideally you'll have all of your meetings, whether it's committee meetings, board meetings, management, whatever it might be on one document .

 

And that should be shared with your new directors as well, just so that they can see at a glance what's going on within the organisation. And they can therefore ask the relevant questions that they need to ask as a director. Because that's a key part of the role, is to ask the right questions.

 

They'll also need access to previous minutes, annual reports, your organisational chart, as I mentioned at the outset.  And ideally, you'll want to be giving them  the  details of the process. To enable contact between directors  so that they can ask each other questions.

 

You might have a board buddy system where they have effectively a mentor as they're coming on board who can support them with. advice, information, background, etc.

 

A finance induction is another step in this process. And again, ideally within one month of their appointment, it would be great to have your treasurer. And if not your treasurer, then perhaps you've got a director who takes responsibility for finance or sits on the finance committee and failing that the next best person who has authority and responsibility over your finances.

 

To sit down with that new director and go through, for example, the past two years financial statements and financial reports, the current financial position, current cash flow, current budget,  year to date, Forecast as well as actuals.  And to give an overview of all of the revenue streams. Or rather, you want to actually go into some detail around The revenue streams of the organisation, and they may include things like your membership,  your events and your annual conference, your sponsorship program, perhaps you've got investments, maybe you've got revenue that comes in through a certification program, or any other means by which your organisation generates income.

 

That should all be gone through with the director, and by the end of that meeting, you The person who's running it with the new director needs to satisfy themselves that that director has a good understanding of the company's finances, has satisfied themself by asking all the questions that they needed,  that things are in order, that the    is indeed solvent, that there are no gaping holes that need to be patched up,  and  they have the information that they need to satisfy themselves of any risk that might exist or any work that urgently needs to be done, specifically from a financial point of view.  And the final step in the process, as in any good planning process, is to seek feedback. So to come full circle and do a bit of a review of the process that you've undertaken.

 

So at some point after the director is onboarded, It's worth setting another time to chat with them. It doesn't have to be so formal. It doesn't need to be the president necessarily. It might even be   your company  Secretary or somebody in the actual team,   who seeks to undertake some feedback with the director.

 

You could do this via a form, but I prefer the chat,  I think you can pick up a lot more information that way than you would just by doing it a tick box form. Though, those things  have their place and are better than doing nothing.   in terms of the process, you'll want to be tracking director's terms, So that you know who is due to retire or re stand for election, when that's due to happen, what roles you need to recruit for. For example, do they hold a portfolio within the board and therefore you need to find somebody with a particular skill set.

 

All of these sorts of questions need to be addressed and you need to make sure that you tick all of the compliance boxes around that too related to your, constitution in terms of how many terms a director can stay on the board for, how long those terms can be, et cetera.

 

You can easily keep track of director's terms via a simple Excel spreadsheet. We have one in the Easy AGM kit, but you can set something up for yourselves really easily and it's a really important, easy, ready reckoner, rather than having to go back through minutes or logging into ASIC, for example, to try and understand when, directly.

 

Join the board, looking back through your constitution to understand what the terms are. If you do that work as they come on board, enter them onto that spreadsheet. You can see at a glance. Okay, we've got a maximum number of, directors of ten, for example. A maximum of two of those can be invited.

 

That means eight directors are elected, and three of them are due for, re election at the next AGM. you know, then instantly where you stand and what work you have to then do to make sure that you don't find yourself in a position where you haven't got enough directors.  So there you have it.

 

That's my overview of the very, important process of giving each of your new directors a thorough induction to your company.  I hope that's been helpful. Of course, if you need help with the process, don't forget, there's a free checklist on our website onsomble. com. au  slash resources.  You can also find there the kit of templates.

 

It's called board induction kit, and you can download that whole kit, which includes. The various templates that you'll need, your consent to act form, your introduction letter and email, and all of the other bits and bobs that we've spoken about throughout this podcast episode.

 

And of course, if you'd like more personalized help, please reach out. You can catch me via thrive at onsomble. com. au,  or you can Contact us via the website or via social media. Speaking of which, I would really love to hear from you. We're three episodes in, and I would love it if you would take a moment to send me a message via socials, via the website and just let me know, are you finding this information useful for your not for profit association? I really hope you are. I'm certainly enjoying bringing it to you and if you've got ideas about specific things that you'd love to hear about or learn about, please reach out and let me know.

 

Would love to hear from you.  As always, thanks for listening and I'll chat to you next time.

 

Thanks for listening to the Service Game Podcast by onsomble. If you enjoyed this episode, please like and subscribe and write us a quick review. It helps us to reach more people and we really appreciate your support.  To access our downloadable resources and tailored support options designed for NFPs, head to onsomble.com. au.  Or look us up on social media. You'll find all our links in the show notes for this episode. Chat next time.