A position on the Board of Directors of a company is very high on the wishlist of many persons.
Though joining a Board can bring rewards and opportunities, it can also come with many risks. We outline some of the key questions that all Directors, especially Independent Directors, should ask while evaluating a Board that they have been invited or sounded out to join.
Many Directors, new and experienced, decide to join a Board without sufficiently reflecting on the possible risks in terms of personal financial liability and the possibility of reputational damage, and without properly checking details about the company, sector and promoters/ key persons involved. It is not uncommon to hear some Directors say that if they had known what they were letting themselves in for, they might have had second thoughts on joining some of the Boards that they were on or continue to be associated with.
To be requested to join a Board can be flattering, but it is wise not to let personal satisfaction override common-sense in evaluating the offer.
Some commonsensical, yet most important, questions to be asked are -
Joining a board is a privilege. However, it comes with its quota of risks. If the fit is right, joining a good Board will be rewarding for the director and the company.