Being a Director is like being a Flamingo #WOBGM

If you’ve been watching my twitter stream, or even popped onto Linked today (my twitter stream is linked so no doubt you’ve been spammed!) you will have noticed that today I am at the Women on Boards “Gender Matters” Conference in Sydney. Well, today is actually a ‘Boardroom Readiness Workshop’ which starts today before the official conference starts tomorrow.

We kicked off this morning with Denise Aldous, who is a Non Executive Director and recently appointed CEO of the Bobby Goldsmith Foundation. She has been in and around finance, advising business and raising capital for business for around 40 years.

She started out by assuring us that she is not an accountant (which was great because I don’t consider myself a numbers person either!), that she wasn’t going to teach us to be accountants but that her intention was to leave us with some key messages.

Her aim was to lift us above the business, so that we can view it as a Director should. One of the most difficult transitions she has experienced is the transition from being an Executive to being a Director. Part of what she aimed to do today, was to try and get us to start thinking more like Directors rather than as Executives, and she tells us “it’s not that easy”. Managing upwards is a key part of this because you to think about things as a Director, and think about what it is you need to see to make those key decisions.

What does it mean to think like a Director? Denise likened it to a flamingo, perched on the top of long legs.

“You are at the top of the organisation. It surveys the scene from high above. It’s always watching and listening. It walks carefully and chooses its position carefully. It reacts immediately to danger and is constantly on the lookout. It ducks down from time to time to get food, but in the case of a Director, it’s to probe for information.”

She encouraged us to keep this image in mind when thinking about the difference between being a Director and an Executive.

Here are a few further key takeouts:

• Happiness is a positive cash flow. It’s absolutely critical. It won’t always stay positive but when it’s not positive, that’s when you need to pay particular attention.
• What business are you in? If you don’t know the business that you are in, it’s very hard to figure out what your particular business should be doing. Who are the competitors? Who are the people you need to watch? What sort of benchmarking can you do?
• You don’t need to be fully versed in accounting practice but you do need to understand the simple sides of accounts. Accounts show a point in time for the business i.e. at that point in time, that’s the date in time that those accounts are relevant. They serve many uses including regulatory uses. When you’re looking at the accounts, you need to look at trends. Usually in the annual accounts, you’ll get two years results so do some simple maths. Look at what the revenue was last year and what it is this time. Look at what the cost of expenses were this time and last time. This way you will be able to see which way it’s tracking. These are the sort of trends that you need to be looking for.
• You should then do what most people’s eyes glaze over at is go to the ‘notes’ that are in the account and just actually have a look and see what it is that is relevant to that particular number. Importantly if you read the Chairman or the CEO’s report that will also give you quite a bit of information about how that business is tracking from their point of view.
• Finally, Denise recommends we ask questions around the information in the strategic plans, and this should form part of our due diligence process. What did they say they were going to do and did they achieve it? If no, why not? These are the questions you should be asking. When you are making the decision to join a board, it’s critical that you do as much due diligence as you can.