Best of the best: top of the director education class

Jan 01, 2009
<p>Corporate Secretary Magazine Awards 2008 'Best approach to board member induction and training' winner UnitedHealth</p>

When the board of directors of UnitedHealth Group decided to expand by five new members in less than three years, the company did something cutting edge: it compiled a handbook; a large handbook.

Everything the new directors needed to know about UnitedHealth’s myriad business activities and board policies was contained between leather covers of the 2.5-inch thick book.

There are key SEC filings, UnitedHealth bylaws, biographies and contact information for all directors and executives, press clippings, summaries of important board policies, outstanding issues, business overviews, legal histories, governance questions and more.

‘It’s a pretty big binder,’ laughs secretary to the board Dannette Smith, adding ‘it’s all in there, down to their payment schedule.’

The handbook itself may not be that revolutionary, but each director’s additional customized training has vaulted way beyond the educational efforts during the early years of this decade. The company has also set up an online directors’ portal for the board that allows them to download detailed information, and it is considering the addition of a starting a chatroom where the directors can informally discuss issues.

A steep learning curve
UnitedHealth’s coaching and seminars are expected
to last most of a director’s first year. This training represents the company’s and the directors’ expectations for its soon-to-be 10-member board: preparedness, familiarity, and above all, responsibility.

All the directors are independent, except for CEO Stephen Hemsley.

‘Our director orientation program is in depth,’ says Smith. For example, governance is ‘an area where a lot of boards are interested in getting up to speed, but you have some very busy people and you have challenging time commitments.’ Doing it in connection with the board meeting will make scheduling easier, she adds.

Minneapolis-based UnitedHealth is a diversified corporation of six related businesses comprising Medicare and Medicaid services, prescription refills, insurance provider and health savings accounts. This means UnitedHealth is about twice the size of its nearest insurance competitors, and subject to banking regulations as well as those governing healthcare.

The complicated nature of the business and the efforts highlighted above were in part responsible for the company winning the 2008 Corporate Secretary Magazine Award for ‘Best approach to board member induction and training’. The company beat out an impressive selection of shortlisted companies to take home the top prize: El Paso Corporation, Manitowoc, Sprint Nextel and Time Warner. The award was sponsored by Wells Fargo.

One of the more interesting elements of the board training program was its design and implementation by the National Association of Corporate Directors (NACD), which worked with the company to target its specific needs and build a custom training module.

The training program is not just for new arrivals. Longtime directors, some of whom have served on the board since the mid-1980s, also participated, and were encouraged to use the online education program in their non-service hours.

The classes ‘give [the board] a customized training in a setting where they might not have gotten that same level of education,’ says Smith.

‘It’s not unusual for a new director to need a year or more to really get familiar with the company and the governance issues,’ explains Smith, adding that the healthcare sector is increasingly dynamic. ‘We just didn’t want to wait that long.’
 
Showing others the way
David Smith, president of the Society of Corporate Secretaries and Governance Professionals, says that he is hearing about more companies who are following the same path as UnitedHealth’s intensive training.

He says it is encouraging to hear about large public companies choosing to customize their tutorials on director responsibilities or legal questions. ‘For a lot of companies, it’s a matter of time, expense and if you’re [large enough] it can be more company specific,’ he explains. ‘You can also relate it to your products and problems in service or distribution or other challenges [specific to your company].’

Both Smiths say the customized training gets new and old directors up to speed more quickly than traditional guidebook-based programs.

In order to get the three new members of the UnitedHealth board up to speed – and refresh the longer-serving directors, some of whom have more than 25 years with the healthcare giant – the company hosts seminars of interest to board members. The new directors have also been meeting senior officials at Minneapolis headquarters for one-on-one discussions.

‘Make no assumptions,’ David Smith says. ‘Every company is different. The culture is different, the management is different, the problems are different. You can’t assume that someone who is a director of GE can go to ExxonMobil and need the same materials.’

He adds, ‘the binder is a good way to indoctrinate a new director. By the time they have been introduced to the bylaws, executive team, directors’ backgrounds, corporate history, industry overview and more, that would lead to a fairly thick notebook. But it has to be distilled and succinct so that it is not overwhelming.’

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