Experience for a Director 5

[rowingengineer]

I have been propositioned to join a civl/structural company by a former boss as a director (1/4). My main jobs to date have been technical senior engineer type roles thus am inexperienced in management roles. The company is a smaller structural/civil company with 25 people on a good day. I have a few (many) concerns, one of which is experience! What is management like at that level? Sure I have been an engineer in charge of a technical crew of about 4-5, but really at the end of the day, all they need is a pat on the head or a bit of direction.

How does this compare to being a director? How much tme would you spend on average being an engineer?

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[patprimmer]

Sorry Row, but no where near enough info on which to base advice.

A company I do work for has 3 directors. They make policy decisions at meetings of the three and other decisions re their areas.

One is director of sales and marketing and is a good salesman and astute businessman from a negotiating of contracts point f view.

One is operations director and is very competent at running the plant and decisions re investment in plant.

The third is more a technical boffin and is technical director and is very competent to formulate new products.

Regards
Pat
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[MintJulep]

Start with the person offering you the job thinks that you have the right experience. That's a good thing.

"Director" is just a title. There is no inherent meaning to it. It could be just a more impressive word for "manager".

Talk with the guy offering you the job.

 

[ajack1]

That might be true in some parts of the world MintJulep but it is certainly not true in the UK.

As a director you can be held personally responsible for a variety of things under law. These include but are not limited too, ensuring proper accounts are supplied to companies house, employment laws and health and safety laws are correctly implemented, treating all shareholders equally and the correct payment of tax, VAT, national insurance contributions.

Failure to do this can result in a prison sentence.

I would strongly recommend that anyone considering becoming a director takes proper legal advice before doing so.

 

[xnuke]

I concur with ajack1. Directors in U.S. firms are usually considered corporate officers and may be held liable for all sorts of things.

xnuke
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[patprimmer]

Rowinf Engineer is an Australian

To date US law does not apply here, although Company Directors here are also responsible to pay due diligence to ensure the corporation complies with various laws and to ensure the company does not continue to trade while insolvent.

You do not need to be an accountant, but you do need to consult an accountant regularly.

OH&S is tougher, but that can apply at any level, not just directors although all directors will become involved if action is taken. Row, I think you are in Qld which is not quite so draconian as NSW re OH&S.

Regards
Pat
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[GregLocock]

Just recently the legal duties and responsibilities of executive directors have been increased, if anything.

I assume they are offering some sort of buy in? If I were you get that side of it looked at by an independent, senior partners usually stiff the junior partners. Roughly speaking a privately held company is worth about its annual turnover.



Cheers

Greg Locock

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[FreddyNurk]

I think PatPrimmer has hit the nail on the head with regards to responsibility.

From working in smaller firms that I've seen (particularly from a consulting view) the directors still had most of their 'engineering' responsibilities, but were also responsible for the financial aspects, as Pat has alluded to.

Points of concern can arise when one particular director (possibly the primary shareholder of the company) insists on making decisions, or ignoring the other director's requirements. The above statement is obviously dependant on company structure however, though I'd seen a few directors in one particular company resign their directorships in quick succession over such an occurence.

 

[patprimmer]

If you are over ruled on something that could leave you vulnerable as a director, you should first establish a written record of the meeting in which the objectionable conduct or decision took place and ensure your objection is noted and there is evidence you seriously tried to influence the conduct to keep it legal.

You must then resign.

Just resigning before things go belly up will not exonerate you unless you have something like the above in addition.

Regards
Pat
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[hokie66]

I would follow Greg's advice as my first line of consideration. Find out the ownership arrangements, what happens with the profits, how much reserve the company has, etc.

 

[Ron]

RE...I agree with much of what has been said. You are getting a 1/4 share in a business. That comes with obligations and responsibilities. The other directors know about you and apparently feel that you are a fit, otherwise one of them would not have offered you the opportunity. If they other directors do not know of the offer, take some Monty Python advice and "run away, run away".

Generally companies select their leadership in complementary ways. As Pat noted, one might be strong in marketing, one in management, one in general leadership and maybe they are looking at you for the technical grounding and leadership that either they are not interested in or have less capability.

Ask lots of questions, get the financials and make a decision as to whether you think you fit with them. Also, it isn't forever. If you don't like it later, you can probably sell out...be clear with them on that point..that you want it to work, but in the event that it doesn't, what is the exit strategy.

 

[csd72]

Rowingengineer,

I was going for a job once that I thought was too much for me and my wife gave me one of the best pieces of career advice I have recieved. She said that if you already know how to do the job then you should be going for the next position above that - it is called a career for a reason and you should always seek to stretch your capabilities.

Obviously your former boss has more faith in you then you do in yourself.

I say go for it.

 

[rowingengineer]

from the small amount of information I gave, there is definitely some gold in the advice given, thankyou. I have the meeting on Tuesday with all the directors where I will get a lot of the information in regards to ownership, financials and timing.

At the moment I am just looking for the right questions to ask and how to tell if they are being on the level.

I assume the is normally a hierarchy in the directors, thus how is this decided upon, is a chairman normally selected or is it share based?

Arguing with an engineer is like wrestling with a pig in mud. After a while you realize that they like it

 

[Ron]

RE...when the ownership group is small, the chairman might be elected by the group, if the shares are equal or nearly so. If there is an obvious majority owner, he will probably be the chairman and will have a corresponding influence on decisions. If the ownership is more spread out, the chairman would typically be elected by all shareholders.

 

[patprimmer]

You need to know the voting rights of all shareholders and if the chair has a casting vote.

Regards
Pat
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[Noway2]

At the company I work for, the middle managers are all given the title of Director. There is a Director of Engineering, a Director of Sales, a Director of Service, etc. These positions are simply middle manager functionaries that oversee a set of subordinates and have absolutely no authority, responsibility, accountability, that one normally associates with a Corporate Director or corporate officer.

 

[patprimmer]

In Australia, a company director is a member of the board and is registered with The Australian Securities and Investment Commission. There are specific responsibilities layed down by law.

Regards
Pat
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[PeterStock]

I found myself in the position of "Director" a while back when attempting to do buisness at home in conjunction with another firm. I had not known I was to be a director and had not actualy signed anything before I was listed on there web site as a director. That should have warned me not to go thru with the deal. It ended when I was not getting paid for the work I did.

Peter Stockhausen
Senior Design Analyst (Checker)
Infotech Aerospace Services

http://www.infotechpr.net

 

[ajack1]

That of course is another issue.

Again I can only speak about the UK but many directors will take at least some of their “salary” as dividends as this is the most tax efficient way of paying yourself, however this can only be done from profits. So in good times this very much works in your favour but when things are tight it can work against you.

Just another reason why it is so important to be fully aware of the true financial state of the company including assets and any debts.