Boards are increasingly seeking to diversify their membership and draw on a wider variety director expertise. Consequently, they find themselves with an exceptional number of new—and often first-time—directors. While the need to acclimate a new director may occur only sporadically, getting it right can be essential to the effectiveness of a board and impact of new directors.
In response to numerous inquiries from corporate boards, we recently researched director onboarding practices across Fortune 500 companies. With responses from more than 160 directors representing over 100 Fortune 500 companies, our research shows that many boards are not investing heavily enough in integrating new directors. Few companies tailor their onboarding process sufficiently, despite the wide range of experiences and tenures new directors bring.
We recommend five steps for improving new director performance and impact:
- Personalize the experience
Our survey found that despite the diversity of backgrounds, nearly 60 percent of directors received a standardized onboarding process. Fewer than a quarter of new directors had a customized onboarding process and—most surprisingly—almost a fifth had no formal onboarding at all. Boards need to accelerate new directors’ performance by investing more heavily in customized onboarding experiences and processes. We recommend a process with a standardized core and modular add-ons that can meet the specific needs of different directors based on their unique experiences. We also suggest spreading out the modules over six to nine months to allow the knowledge to grow in context.
- Create a board-led process
According to our survey, the board secretary is most likely to lead onboarding programs, running the process for 44 percent of new directors. Independent chairs and lead directors rarely have such a prominent role. Effective director onboarding points to reversing these numbers: The independent chair, lead director or chair of the nominating and governance committee should own the onboarding process, with support from the board secretary. Board leaders can provide greater context and nuance around the board culture and business strategy. And while board leaders face greater responsibilities, we see a role for every director to play in integrating new directors.
- Broaden the leaders new directors meet
We found that a surprising number of directors had not met with key company leaders during either their recruiting or onboarding processes. Nearly a quarter (24 percent) of new director did not meet with the lead director, and 17 percent did not meet the non-executive chairman, depending on the board’s structure, during either their interview or onboarding process. Thirty-six percent had not met the CHRO, and 53 percent had not met with the Head of Internal Audit.
In the context of the onboarding process, it is very surprising that a new director would not meet with the lead independent board member or non-executive chairman. In light of common issues around company culture and financials, we also find it concerning that new board members do not routinely get to know CHROs or internal audit heads. We suggest that the onboarding process include opportunities for new directors to meet with all key leaders (at the board and management levels) in the months after joining. These meetings will give the new directors more exposure to the company and ultimately help them ask better questions.
- Consider a mentoring program
We see board mentoring as a growing trend and effective in many cases. Currently only 6 percent of new directors have a mentor, according to our survey. Among those who have mentors, the most common benefit cited was insight into board culture. In a mentoring program, a new director is paired with a tenured director, who checks in with the new director over the first 12 to 24 months. The board mentor answers questions on everything from historical context to cultural nuances to unfamiliar acronyms. The mentor also may provide informal feedback for the new director.
- Improve director feedback
There is room to improve the feedback given to new directors. Anecdotally, we hear that board members wonder how they are doing and how other directors perceive their contributions. This is likely because they do not get direct feedback: More than half of our respondents—56 percent—did not have a feedback session with the non-executive chair or lead independent director within their first six months. As onboarding meetings are being scheduled for new directors, board leaders should plan for one-on-one feedback sessions six to 12 months after director appointment.
A strong onboarding program will improve the quality of the contributions the collective board provides to management. A well-executed onboarding program ultimately will lead to the boarding contributing to greater value creation for its shareholders.