Clearhouse
Onboarding New Directors: Beyond the Board Manual
Publication Date: June 27, 2017 

The process of acclimating a new director to a corporate board can have a profound impact on boardroom dynamics. In this post, Joan Conley, Senior Vice President and Corporate Secretary at Nasdaq, shares key elements of Nasdaq's onboarding process as well as insights into the importance of a robust onboarding program.


Ideally, the onboarding process enables a new director to hit the ground running at their first board meeting. Proper onboarding also ensures critical alignment between management, the board and stockholders. Given those ambitious goals, there is much more to onboarding than asking a new director to read a manual and leaving them to tackle their role through trial and error.

Many companies mistake orientation for onboarding. Orientation is a one-time event designed to welcome a new director to the company and the board, outline meeting schedules and board service logistics, define their role, and provide a big picture overview of the company.

Onboarding, on the other hand, is a continuous process. It includes the orientation event and indoctrinates a new director into every aspect of the company's business, culture and the competitive environment it operates in, thereby facilitating meaningful contributions from directors and growth in long-term value for shareholders.

Nasdaq's onboarding process has evolved over time and includes the following key components, all of which are designed to help a new director shorten the learning curve and quickly become a meaningful contributor to the work of the board.

Establish a structured onboarding process.
Given the amount of information new board members need to absorb before their first board meeting, it's critical to have a focused plan in place to deliver that information. At Nasdaq, our onboarding educational process includes:

  • An orientation program that covers the following: board membership and meeting logistics; governance and director responsibilities; Nasdaq business strategy, goals, risks, operating environment, and recent financial performance; and presentations from corporate departments related to information security, corporate communications, and investor relations.
  • Face-to-face meetings with key executives and business unit managers.
  • Required reading of board meeting minutes and documents (including strategy, budget assumptions, compensation, and meeting minutes), investor presentations and analyst reports.

The different elements of governing a company fit together like a puzzle, and the onboarding process should help a new director fit the pieces of that puzzle together. New directors benefit tremendously from granular context on a company's operating environment, corporate strategy, goals, risks, opportunities, financial performance, and cyber security programs.

For example, at Nasdaq, we provide strategy slide decks from the prior year that outline the 1, 3, and 5-year strategies, along with minutes from subsequent update meetings, so new directors can see how the strategy has been followed. We encourage them to spend time researching our largest long-term stockholders and what motivates them to hold Nasdaq stock in their portfolio. We provide new board members with current and historical analyst reports, to give them a sense of how the company's strengths and weaknesses are perceived in the investment community.

Start the onboarding process before election day.
Don't wait until election day to engage new board members--start the onboarding process as soon as the proxy is released. At Nasdaq, onboarding of new directors starts as soon as a new director's nomination has been confirmed by the board and it is determined that the nomination is uncontested. That means even before the vote is final, we begin the very robust educational process outlined above.

Some general counsels may be concerned with providing confidential information to new board members prior to the election; in that case, a company can begin the education process with their public investor presentations and after that arrange for meetings with business unit leaders and others that may include confidential and proprietary information.

Make Audit Committee membership mandatory for new directors.
Every new Nasdaq director serves on the Audit Committee. Through audit committee service, new board members learn key enterprise risks, the financial and operating conditions of the company, how management relationships function within the organization, and details of the operations of each business unit. Audit Committee members hear presentations from internal and external auditors and experts within the company, review every internal audit report, and learn detailed financial information about the business. It's the best "on the job training."

Assign a mentor to new board members.
Board members with long tenure are an indispensable resource of institutional knowledge and historical context for new board members. Seasoned directors have seen the company through its most significant events: companies' success, market downturns, lawsuits, shareholder activism, acquisitions, and business model transformations. Pairing new directors with a mentor from the board accelerates cultural acclimation and encourages meaningful contributions from new directors during their first year.

Customize onboarding to individual directors.
Each director is carefully chosen for a board based on their unique skillsets, experiences, and talents. The onboarding process should be tailored to leverage those strengths, ensuring they contribute to their full potential and nurturing their interests in the company.

Ensure onboarding is ongoing.
Onboarding is essentially a process of continuing education. The three main elements of continuing education for board members at Nasdaq are knowledge sharing, rotating committee assignments, and offering opportunities to broaden and deepen their knowledge base.

I see a key role of the Corporate Secretary as aligning executives and board members, so the more opportunities I find to bring them together to exchange information the better. This continues even after new members have completed their first year, and these opportunities to meet with executives and business unit leaders are also individualized to each board member.

Rotating committee memberships is another excellent way to expand a board member's knowledge of the company. When a director is assigned to a new committee, they need a complete orientation on that committee's mandate, charters, and principals. Rotating committees begins a new sequence of onboarding events, refreshes the committee, and opens a whole new information silo for the board member.

I also continuously push news and information out to board members, again on an individualized basis. I send them relevant articles, updated analyst reports, links to subscriptions and alerts they may be interested in, and Nasdaq's daily news clips. I utilize Director's Desk for this, as well as the NACD daily summary. I maintain a budget for events and educational sessions that our board members may want to attend, such as director conferences.

Assess the fit and performance of new directors.
During a board member's first year of service, it's critical to assess whether the director is contributing effectively to the board and fits the group dynamic. That assessment takes place throughout the board cycle, not just during semiannual board assessments. If a new director needs assistance I work confidentially with the board chair to develop an action plan: perhaps a new director needs tutorials on non-GAAP financials, or information about a new product line or context on strategy in a certain business area, we tailor the onboarding plan to meet these needs.

Solicit feedback from new directors.
An onboarding process and curriculum is not something to develop and put on a shelf because it continually evolves with the business landscape and ideally is tailored and individualized. At Nasdaq, we solicit feedback on the onboarding process from new directors during their frequent first-year check-ins with the board chair and CEO. We continually modify our onboarding program based on that feedback, information they share about business units they may not fully understand, topics they felt they spent too much time on, or areas where they have a greater thirst for information.

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Joan Conley is Senior Vice President and Corporate Secretary of Nasdaq and its global subsidiary organizations and, in that role, is responsible for the Global Nasdaq Corporate Governance Program and Nasdaq Global Ethics Program. She also serves as Managing Director of the Nasdaq Educational Foundation and is a Director of the Nasdaq Entrepreneurial Center Board.