Many business leaders are promoted to director level, only to be removed from the post shortly after. Paul Bennett, chartered director and IoD fellow, highlights the three mistakes new directors often make and steps to avoid them
Over the years I have witnessed many directors being removed from their post. It’s distressing for the individual and disruptive for the business, but the question is why were they removed?
After all, most people are promoted on the basis of their excellent performance as managers. So what changes? How can you be unassailable one moment and yesterday’s news the next, purely on the basis of one promotion?
Well, one common trap I’ve seen people fall into is to continue to act like managers in the boardroom, not like directors. And there is a big difference in the roles.
Here are the top three mistakes that I’ve observed – and my suggestions of how to avoid them:
1 Staying in “conformance mode”
Conformance is great. To me, it means doing day to day business and it’s a really comfortable place to be for a competent manager to inhabit, day in day out.
While conformance can be essential for directors, in areas such as regulation compliance and director duties, when it is held out of balance with business strategy big problems quickly emerge on the horizon (when, for example, government policy changes effect industry).
It’s the job of the director to have a helicopter view of the business, sector, clients and stakeholders and to understand how and when to tweak, alter, change or revolutionise products and services. So strike the balance between conformance and strategy.
2 Not challenging other directors
This is not typically the role of managers to whom the responsibility for delivering the strategy is delegated.
But the board has cabinet responsibility. Everyone around the table has equal accountability for the decisions that are made and ultimately, the success or failure of the business.
We’ve all seen where this balance has been alerted – and in some cases the public fallout that has followed it.
A charismatic, powerful director can heavily influence the actions of others on the board. The problem arises when this influence is not in the best interest of the shareholders, organisation, employees or customers.
So, while managers generally need to follow the instructions and the intent of directors, board members need to challenge each other – play devil’s advocate if necessary – for the common good, not simply concur.
There are still too many examples of boards where ‘group think’, or even bullying, has occurred because of the malign influence of one or two strong characters, and the decisions that result are rarely good.
So speak up, don’t be afraid to ask the stupid question and challenge!
3 Failing to focus on long-term value
Managers tend to focus on implementing a process and measuring its efficiency; they are most concerned with the profitability of their actions in the short and medium term.
Directors, on the other hand, focus upon creating value for organisations, customers and stakeholders in the longer term.
Creating value requires an in depth understanding of value chains and changing customer needs that goes well beyond the current service level or product performance of today.
So look ahead to create and build value for the future. As Henry Ford may (or may not) have said: “If I had asked people what they wanted, they would have said faster horses.”
Paul Bennett is a chartered director. To find out more about becoming a chartered director, click here