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Beating a path to the board: what skills do you need to become a director?

I was recently asked to write an article about the influx of Generation Y into the boardroom; a group of fresh, talented individuals, many who now find themselves among the business elite at a relatively young age and who have proved a magnetic draw for organisations. Much as I admire their undoubted talents, I cannot help wondering whether they will be fully prepared for the role they will be faced with. A directorship, particularly of a large multinational company, is a complex, almost distinct profession which comes with clear expectations about competence, ethics and behaviours. All directors, whatever their age or level of experience, are bound by strict regulation and legislation, backed by severe penalties for the most serious transgressions. Details are set out in one of the largest legislative documents ever created, The Companies Act 2006.

The Act sets out the requirements for directors to act in a way that they believe, in good faith, is most likely to promote the company's success. One senior FTSE director recently told me that he regarded the first year on any board as effectively an induction period – unfortunately, however, legal liability begins from day one. Being a director is therefore a very different role, legally and psychologically, from being a senior executive. It brings unique responsibilities and legal liabilities which are qualitatively different from other management and operational roles. However, those who join boards as executive directors are often surprised by the complexity and scope of the job they now need to do. Not only must they continue to oversee their key operational responsibilities, but they now have a general overview of a company's operational activities and corporate governance, including an understanding of its exposure to risk and strategic direction.

It is quite a task, particularly with the huge diversity of large organisations which make full and proper oversight extremely difficult. But, as the recent failures of two major companies, Tesco and The Co-operative Group demonstrates, the consequences of a failure of governance can be devastating for an organisation. Plus, of course, directors must be able to make difficult decisions based on the available information, which may well be incomplete.

Beating a path to the board If you feel you are the right stuff for a directorship, don't be put off by the idea that boards are white, male and middle-class if you don't fit that mould. There is an increasing recognition that such a boardroom is not ideal from the perspective of either corporate effectiveness or wider social legitimacy. Many boards have failed in the past due to their inability to overcome "group think"' – a tendency for a group of people from similar backgrounds to think in the same way, despite one of the key purposes of a board being to introduce a range of perspectives into decision-making. As a result, increasing emphasis is being placed on boardroom diversity and, for the most able candidates, the door should always be open.

While it may seem that the only path to follow still is via the executive route, which can be pretty tortuous, there are alternatives. For example, it may be worth considering the more flexible path offered through becoming a professional director/non-executive director (NED). NEDs typically sit on the boards of public, private and not-for-profit organisations, working as a "critical friend" reviewing the organisation's performance and providing objective, strategic advice to the executive team. For candidates preparing for executive director positions, taking a non-executive role within a charity or third-sector organisation can be very useful; it provides experience that should provide greater credibility and gives each a taste of the authority needed for a director position. Non-executive positions typically offer greater scope and flexibility in terms of individual suitability, hence making non-executive appointments can support boardroom diversity among under-represented groups. Furthermore, a NED role can be considered as part of a portfolio career where the individual holds various remunerated non-executive positions at different organisations.

Where to start For all new directors, the scope of the role and the extent of their authority can be found in the company's articles of association. These define the company's purpose – "Why do we exist?" – and also lay out how tasks are to be accomplished within the organisation. Board inductions, mentors and high quality professional training specific to the role should be considered essential first steps for all new directors. Not every company offers them but they are invaluable for preparing you for the challenges ahead. As Karen Dicks, chief financial officer and company secretary of natural healthcare manufacturers Nelsons identifies: "Having a strong technical expertise which you confidently demonstrate, is a given once you achieve the director level. Nobody is born with all the technical skills required, we take time to develop our knowledge. "We should also take time to develop our leadership and directorship skills. Director training equipped me with a toolbox of skills including an understanding of conformance and performance, providing clarity over appropriate board structures as well as the legal obligations and fiduciary duties of directors."

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