Consider External Recruiting Firms!

September 27, 2009 at 1:05 pm 1 comment

1 dart isolated on a white background concept of success.Approximately 80 percent of board seats are still filled by friends or associates of directors or the senior corporate officers of the company. Selecting friends and associates to serve on a board may foster collegiality but doing so also raises questions about director independence, director capture and so forth.

Director independence is of course of paramount importance to corporations and their constituents. Director independence is critical for public corporations and corporations intending to go public which are subject, or will become subject to, the corporate governance standards of the various exchanges. For example, to be eligible to trade on the NASDAQ Stock Market, companies must have a minimum of two independent directors at the time of listing. Director independence is also important to corporations because institutional shareholders pay close attention to corporate governance (particularly these days) and prefer for corporations to fill board seats with objective and unbiased director candidates. Investment decisions are based accordingly.

As such, rather than going the friends and associates route, boardrooms should give strong consideration to enlisting the aid of external recruiting firms. Executive recruiting firms that specialize in corporate governance will strategically analyze the existing board and help in the determination of the type of director skills that are required. There will then be a proactive analysis of the environment to seek out the very best talent obtainable not just those that are proximate. Extensive due diligence of director candidates is conducted, which amongst other things wiil help assuage fears associated with filling a board seat with someone who is unfamiliar with the directors and senior officers. Furthermore, the Executive Recruiter will interview directors in view of the corporation’s plans and goals as well as board culture and dynamics. The end result is undoubtedly a more thorough and strategic board recruitment process with director independence being simply one of the many benefits!

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Entry filed under: Business, Corporate Governance, Recruiting.

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1 Comment

  • 1. JimmyBean  |  October 1, 2009 at 8:03 am

    I don’t know If I said it already but …Hey good stuff…keep up the good work! 🙂 I read a lot of blogs on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I’m glad I found your blog. Thanks,)

    A definite great read..Jim Bean


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