Questions to Ask Before Accepting a Position on a Board of Directors
By James R. Lint
Faculty Member, School of Business, American Public University
After military life and some seasoning in the civilian world, servicemembers become highly sought after by the board of directors of companies and nonprofits. Service members are problem solvers, gaining skills in the military that are not easily acquired in the civilian world. They are accustomed to getting necessary tasks done, which appeals to a board of directors.
Being on a board of directors gives you challenges at a strategic level. It builds your strategic management skills for further advancement and opens new networking opportunities. For service members, this work can validate your skills in senior level management outside of the military. However, here are some questions to consider before you accept that directorship:
1. Has the organization paid and filed tax forms for the last seven years?
If the answer is “no,” this answer shows problems with the IRS and a lack of due diligence in the past. If a task like filing tax forms is not completed, what else is out there as a surprise?
Most people who have worked with nonprofits, for example, know the IRS rules on filing. By law, automatic revocation of a federal tax exemption occurs when an exempt/nonprofit organization does not file an IRS Form 990 for three consecutive years.
Providing this tax form is simple and a matter of corporate discipline. If this tax form is not filed, that is an indication that there may be more problems. Be sure to ask the current financial status of the organization as a follow-up question.
2. Does the organization have any personnel problems in the company or in the Board of Directors that impact its goals and mission?
Another non-enjoyable event is to discover that members of the board are suing each other. It happened in the case of Morrical v. Rogers, Cal. Ct. App. Case No. A137011 (Oct. 10, 2013), when brothers and sisters had a disagreement. There have been other cases where a clique or group asks the new board member, an outsider, to side with them on a contentious issue.
These are areas that a new board member must explore to determine if the organization is sinking. Most new board members bring energy and zeal to the new job. They have years of solving problems and do well on definable problems.
3. Is the organization under investigation for any illegal activities?
Another good question to ask is if the organization expects the FBI and SEC to execute a warrant in the near future. Full disclosure to a new board member gives an understanding of the challenges that he or she faces.
Some organizations will ask you to join the board but forget to volunteer this type of information. If you do not ask for this information, you face a disadvantage that impacts your performance as a board member.
Challenges to look for in the business world are lawsuits from external organizations, sexual harassment or equal opportunity issues. Other issues include bribes or corruption charges, especially with international organizations.
Any of these challenges can trigger actions that will not let the board advance the organization’s goals. Clean-up chores become the focus of the board and divert the board from accomplishing its mission.
Do Your Research and Be Sure to Ask Questions
Before you agree to join a board of directors, consider its status, problems, challenges and success. Don’t be shy about asking questions.
An organization having challenges is not the problem. Not telling a pending board member about those problems is worrisome because the board either does not know the problem or is hiding information.
Knowing the challenges you face as a board member is a fixable situation. Experiencing surprise challenges is disturbing. Your goal should be to turn these challenges into solutions and keep the momentum moving forward.
A directorship is the perfect validation of your life experience and can create some great job satisfaction. The follow-up questions you should ask the organization are:
1. What are your solutions, what has been done and is it working?
2. How do you envision my help?
The military would not go on a patrol without knowing enemy threats, weather, wind, and the equipment needed to survive, win, and be a success. Use the same “smarts” in selecting a position on a board of directors.
About the Author
James Lint recently retired as the civilian director for intelligence and security, G2, U.S. Army Communications Electronics Command. He is an adjunct professor at AMU. Additionally, James started the Lint Center for National Security Studies, a nonprofit charity that recently awarded the 38th scholarship for national security students and professionals. He has 38 years of experience in military intelligence within the U.S. Marine Corps, U.S. Army, contractor, and civil service.
James was also elected as the 2015 national vice president for the Military Intelligence Corps Association. He has served in the DHS Office of Intelligence and Analysis and at the Department of Energy S&S Security Office. James had an active military career in the Marine Corps for seven years and also served 14 years in the Army. His military assignments include South Korea, Germany, and Cuba in addition to numerous CONUS locations. James has authored a book published in 2013, “Leadership and Management Lessons Learned,” and a new book “8 Eyes on Korea, A Travel Perspective of Seoul, Korea.”