The Board Director Vetting Process

February 20, 2009 at 8:36 pm

It is quite commonplace to discuss the vetting process for potential employees at all levels and in all types of organizations. The formula is simple enough and quite consistent: a resume is submitted followed by a telephone conversation and then a face to face interview ensues. This can be followed by several additional face to face meetings and becoming more frequent these days is testing, both psychological and aptitude. References are then conducted and depending on the level of the possible employee this can be somewhat complex and include what is popularly called 360° referencing.
But how does this play out when dealing at the board director level? As we know independent board directors, although not technically employed by the company on which they serve, have far reaching and significant influence. As such it would seem that they too are subjected to some formal, detailed and importantly objective selection process. Regrettably, this is not always the case.

Until recently in most cases potential board directors were “invited” to join a board with little formal interviewing involved. Subsequent to the Enron fiasco and the consequent adoption of Sarbanes Oxley, corporate boards formalized the process somewhat and simple invitations gave way to more methodology and competition for an open seat. This is certainly a move in the right direction. I suspect that as the dust begins to settle in our current business environment progressive boards will move towards a model of even more objective evaluation and decision making as it relates to board members. We are currently seeing an increase in formal board and director evaluations but only AFTER a Director is elected to a board and even this is still not pervasive.

It would be hard to argue against increased scrutiny at all levels of an organization. This would ultimately serve all stakeholders well even if there needs to be an interlude of initial adaptation!

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Entry filed under: Corporate Governance. Tags: , , .

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