Board leadership onboarding best practices are the standard for all new board directors, whether they serve on private, public or nonprofit boards. Nonprofits have much to gain from following all aspects of good governance. The best and most effective boards adhere to good corporate governance principles because they enhance trust, prevent fraud and mismanagement, and promote sustainability.
Nonprofit boards get a lot of things right. They work hard at remaining compliant, so they don’t lose their nonprofit standing. Over time, many of them become quite proficient at fundraising. However, studies show that nonprofit onboarding practices are weak or nonexistent. About two-thirds of nonprofit boards have term limits, which means board turnover is faster than for public boards.
It’s clear that nonprofit boards could do a far better job at onboarding their board directors so they can get them up to speed and working for the benefit of the organization as quickly as possible.
How Do Leadership Onboarding Best Practices Vary Between Nonprofits and Public Companies?
In 2017, Heidrick & Struggles joined with the Antonin Scalia Law School at George Mason University in surveying board directors about governance practices. The survey indicated that most nonprofit board directors spend approximately 172 hours performing their board duties annually. Many board directors serve on multiple nonprofit boards.
The results showed a glaring weakness of onboarding practices by nonprofit boards. About half of the board members surveyed stated that their boards had some type of onboarding process. Less than half of the directors who responded to the survey indicated that their organization’s onboarding process had properly prepared them for their board duties.
When we compare these figures to the statistics for public companies, we see some surprising differences. According to the 2016-2017 NACD Public Company Governance Survey, almost 75% of public companies reported having a formal onboarding program. Almost 84% of the respondents described their onboarding experience as effective or very effective. Over 97% of the board directors stated that they had an opportunity to meet with members of the executive team during their onboarding session.
The irony is that slightly less than 60% of CEOs of public companies also serve on nonprofit boards, so you’d think they’d bring their onboarding practices with them. If nonprofit boards have an onboarding process at all, it’s clearly subpar by comparison with public companies.
For nonprofits that realize they’re lacking in the area of board director onboarding, there are many things they can do right away to improve their onboarding processes.
Take Cues From Public Companies’ Leadership Onboarding Best Practices
As noted, many nonprofits recruit CEOs and board directors of public companies to fill their vacancies. This provides a prime opportunity for nonprofits to learn more about the process of onboarding at public companies. Nonprofits don’t necessarily need to match the scale of public company onboarding processes. It’s easy enough to scale a two-day orientation process down to one or more hours. Nonprofits should start with the most crucial elements and build from there.
Determine Who Will Be Responsible for the Onboarding Process
It’s less important who fills this role than it is to make sure it gets done. The board president, board chair, board secretary or some combination of them can develop and implement the onboarding process. Alternatively, the nominating and governance committee can fill this role. The responsible party needs to develop a program and decide how long onboarding should take and whether they will present it as a group or one-on-one process.
Gather Materials for Onboarding Presentation
According to the Heidrick & Struggles survey, this is one area in which boards excelled. Over 80% of the respondents indicated that their boards had explained their board responsibilities with them and shared the organization’s financial information. About 75% of board directors said that they had received information about the hierarchy of the board and the organization. About 66% of directors said that their onboarding had included information about the organization’s strategic plan and any legal issues.
Boards should gather up the following reports and have them ready to present:
- Most recent annual report
- External audit reports
- Bylaws and charters
- Statement of board director responsibilities
- Organizational chart
- Contact information for all board directors
- Board meeting minutes of the last few meetings
Invite the CEO to a Portion of the Onboarding Process
This is another area in which nonprofit boards tend to be lacking with respect to onboarding processes. About 20% of board directors indicated that they hadn’t met the CEO prior to accepting their board position. About 38% responded that they hadn’t met the senior leadership of the organization. Arranging for board directors to meet with the CEO and current senior leadership will help to fully prepare new directors for board service.
Nonprofits that have the benefit of having a legal officer or advisor should arrange for a short meeting with the legal expert to make sure that the new director understands the technical workings of the board, their legal responsibilities and governance policies.
Customize the Onboarding Process to the New Director
Nonprofit board directors come from a diverse set of backgrounds and experiences. Newcomers to board service will need vastly more information about the organization, governance and issues that are critical to the organization’s mission. Be careful not to assume that just because someone has prior board service, including those with CEO experience, they’ll automatically know how to serve on your board.
Set Up a Mentor for New Directors
About 36% of the nonprofit director survey respondents said that they had the opportunity to be mentored by an experienced director. In public companies, board directors get paired with a mentor only 10% of the time. It doesn’t have to be a formal mentoring program to be successful. New board directors just need a contact who can help them understand what to expect, answer their questions and help them get involved.
Board Management Software Makes Onboarding Efficient
There’s no question that boards can improve governance by implementing an onboarding process. Technology can help to make the onboarding process more professional and efficient by implementing a board management software system by BoardEffect. The program is highly secure and can be set for granular permissions for even greater security. Boards can essentially perform all of their board duties within the security of a single platform that includes unlimited cloud-based document storage. Imagine how easy it will be to retrieve all the necessary documents at one time from a single source when conducting your onboarding process.
Nonprofits may be overlooking the all-important onboarding process for new directors in the interest of saving time. Current board directors can help themselves and their peers by accelerating new directors’ performance with the assistance of a BoardEffect board portal system.