Why managers struggle to step up to the board

Christopher Niesche

Nov 12, 2020

AFR

For Andre Wessels, the transition from executive roles to a non-executive position has required a shift in mindset.

“I’m quite the perfectionist. When I was in an executive role you just do things in a certain manner and make sure that the results are delivered. In management positions, you can make sure that that happens,” says Wessels, who joined the board of PipinNini Lithium in March this year.

Andre Wessels

A board role is more about collaboration and influence than managing, says Andre Wessels.

“Whereas I found sitting on a board, a non-executive role, takes a mindset change, because I can’t influence the line management any more.

“It’s about working with the managing director to give ideas and discussing the strategic positioning of the company and the challenges and opportunities, but then standing back so the executive management can manage that. It’s a very different perspective.”

Wessels, who completed the Australian Institute of Company Directors course in 2013, says the role is not without its frustrations when things don’t happen in the way he thinks they should, but a board role is more about collaboration and influence than managing.

“At the end of the day, you’re part of a democracy,” he says.

Wessels says he also needs to distinguish between those critical matters where he feels the board needs to intervene and those that he can leave to management.

Peter Stevens, executive director of the MBA and executive education programs at the University of South Australia Business School, says many new non-executive directors have difficulty in shifting their mindset from operations to oversight and strategy.

Rather than going narrow and deep into the organisation, directors need to be fairly broad in the things that they look at.

— Peter Stevens, UniSA Business School

“That’s the piece that I see most people struggle to make the shift,” he says.

“You can quite often tell the people who have got proper education in the role of a board from those who haven’t, just in the way they interact. Those who understand the role of the board will be asking much more strategic questions and helping to guide strategy. Those who probably haven’t got all the way to making that transition will be asking a lot more operational-focused questions.”

While managers are responsible for operations of the organisation and the day-to-day detail, directors take a broader view and their key role is selecting the CEO, setting strategy with management, oversight and signing off on the company’s accounts.

Stevens, who collaborates with the AICD on the directors education program at UniSA, says while there is no specific training for directors to shift their mindset, education can help.

“Firstly, it’s really being aware of what that difference is,” he says.

UniSA’s Company Directors Course spends quite a bit of time outlining the differences, illustrating them with examples, but ultimately, says Stevens, it requires practise, like any new skill.

“Rather than going narrow and deep into the organisation, directors need to be fairly broad in the things that they look at,” he says. “And you look at them at a level that enables them to feel comfortable that’s being done properly.”

Learning where to put their focus is, to some extent, a skill that a competent executive should have already learnt. In joining a board, they need to further exercise that discipline.

Stevens says being able to collaborate and listen to a variety of opinions are also important skills to develop for a board role. “That’s part of that difference between director mindset and manager mindset. As a manager, you make decisions and drive operational activity in the organisation. As a director, you’re one step removed from that,” he says.

David Schwarz, CEO of director recruitment consultancy Board Direction, says new directors need to develop their softer skills to accommodate the shift to collaborative decision making around the boardroom table.

“They’re part of a group decision-making body, and those decisions may not always go their way,” he says. “As an executive they call the shots and things go their way, but at board level they’re about forming consensus.”

Schwarz says many senior executives have already developed many of the skills they need to become effective directors.

He recommends executives take a board appointment while they still have their executive role. The governance and strategic skills they gain on a board will be of benefit to their executive career.

And taking a board role sooner rather than later means that they will be better positioned to transition into retirement or to line up a portfolio of board seats when they step back from their executive role.

PipinNini Lithium’s Wessels, who also runs a mining consultancy, appreciates the flexibility that comes with a non-executive director role, and enjoys focusing on the bigger picture.

“I like the strategic focus, really looking at strategic considerations,” he says. “I’ve sat in line management roles for most of my career and although I find them very fulfilling, there are lots of operational challenges – and now there are certain operational things I don’t have to worry about.”