Thinking of being on a board of directors? Four things to consider

Being a member of a board of directors can be a prestigious and rewarding activity. It allows business and community leaders to work to improve companies in which they have an interest, or to support non-profit organizations they care about. Board membership provides a valuable platform for social and business networking.

But, it's also a significant responsibility. Many candidates for the position don't fully understand what's involved. For instance, board members assume personal liability for the consequences of their management decisions. Or, in some cases they are expected to invest a significant amount of time in work on committees, or fundraising activities.

Here are a few of the important things to consider before accepting a seat on a board of directors:

Know when you're a good fit - and when you're not.
As flattering as it is to receive an invitation to serve on a board, take time before you accept, to be sure you're right for the job. Companies and organizations have a variety of reasons for offering you the position. You may have skills they need, or provide access to resources they otherwise lack.
Make a point to know what they see in you, and decide for yourself whether you are comfortable playing the role they have in mind. Also, be honest about whether you can deliver all they think you can.

In some cases, your decision may be based on what's best for the organization in question. I once turned down a position on the board of a regional university after considering who was on the board already. All the other members were qualified community leaders and business people. But none had influence beyond the local environment. The problem was, neither did I. I felt strongly that the board would benefit more by inviting someone with national, or even international appeal. Since then, the school's reputation has developed dramatically - and justified my decision.

Know the organization's financial liability and insurance coverage.
As a board member, you can be personally sued for decisions and actions that result in harm to the public, or to stockholders. It is important to understand what your exposure could be in such a case. Companies and organizations typically carry insurance to deal with lawsuits, but the policy may be inadequate to cover the full liability. A $1,000,000 policy won't even pay the legal fees on a $30,000,000 suit.
Make sure you do the math before you take the job. If you have a substantial financial stake in the company, the risk may be worth it. If not, be careful.

Know the management team.
One of the duties of a board of directors is to oversee the organization's management practices. In other words, you are legally liable for the actions of your management team, as well as your own. Get to know the people who run the company before you agree to vouch for their competence and integrity.

Know what's expected of you.
There are two kinds of boards: "advisory" and "working."
As a member of an advisory board you may simply be expected to offer wisdom in important decisions. Or, you might be called on to cultivate donor relationships, as a member of a non-profit board. The time commitment involved is usually not significant.

A working board, on the other hand, is expected to take responsibility for hands-on management activities. For instance, if the company decides it is time to revamp its human resources policies, you might be asked to chair the committee of employees tasked with the job. A friend, who was a member of a local non-profit arts center board, told me his first official act was to spend a whole Saturday cleaning and painting the basement.

Serving on a board can be an exciting opportunity to be on the cutting edge of an organization's growth and advancement. Just look before you leap. Know what you're getting yourself into and avoid any unpleasant surprises.