The Do’s And Don’ts of Recruiting, Developing and Retaining an Excellent Board of Directors!
An experienced, well-trained and well-informed Board of Directors is the lifeblood of every organization whether it be for-profit, non-profit, public or private. The members of the board should play a large role in determining the strategic direction of the organization and of course take the lead in succession planning. Additionally, some of the biggest decisions about a company’s future lie with the Board of Directors and therefore, it is vitally important that they understand their roles and responsibilities.
Before any of the above can occur the organization must anoint, nurture, educate and occasionally replenish the board. But how is this done? It seems that we hear so much criticism of boards without accompanying suggestions for improvement…so here goes….
Identifying Potential Directors
Before the recruitment begins, it is important to identify a company’s goals, strategies and position with respect to its business environment and competition. Also, it is extremely important to conduct an impartial and thorough evaluation of the existing board to identify missing skills and expertise that have to be acquired. Ideally, the use of a skills matrix in which Directors and their relevant qualifications are plotted on a table will facilitate seeing the gaps in the abilities and talents of your current board.
As a best practice the nominating (or nominating and governance) committee takes care of identifying and recruiting new talent for the board. In reality, the CEO is usually involved as is the General Counsel and even occasionally the CFO.
The ideal board candidate possesses a variety of the skills and knowledge that the board requires. He/she is also sufficiently unencumbered so as to be able to take on this additional responsibility. There should be no conflict of interest inherent in the potential candidate’s background and affiliations.
A well-known, successful celebrity executive (or simply celebrity) doesn’t automatically make a good Director. They might be willing to help and contribute but usually, they are simply with many competing demands and simply short on time. Such individuals can possibly participate on an advisory committee.
Make sure that your candidates genuinely interested in your company’s goals and aims. Otherwise, they might make half-hearted decisions about things that don’t interest them. Even though they have all the right credentials, be wary of the misplaced experts.
Don’t be afraid of hearing “No” repeatedly, and chase whole-heartedly after someone who strikes you as the “right” material!
Recruiting New Board Members
There are two ways of finding and recruiting the right talent.
First, the existing members of the board can suggest someone they know for a position on the board. Second, companies can hire firms specializing in recruiting executive talent.
Word of mouth hiring has its own benefits but because of fears of collusion among Directors who know each other personally, such practices are becoming more and more discouraged.
Executive Recruiting firms ideally should provide a strategic, guided, analytical approach. With respect to board searches in particular, the Recruiter should have experience conducting board searches which follow a completely different process than a regular executive search. A thorough understanding of the world of corporate governance with its ever-changing rules and regulations is key.
The recruitment firm should activate a top down approach to the recruitment of your next Director. That is, they should look at the company’s goals and strategy, apply this to the board, see the gaps in experience and then go into the market and not only identify the very best talent for the role but successfully get them interested in your company as well as the board opportunity.
The Recruiter will help gauge not only objective qualifications but passion for your mission, potential for commitment to your company and style and fit with the culture of your board and organization. The recruitment process should not be simply to fulfill regulatory requirements.
Developing Exceptional Directorial Talent
Since the recent boardroom fiascos, board development is taking center stage in many public companies. Director education and training is taken seriously and various programs are organized to give the 21st century Directors an education in rules and laws governing their “profession”.
These programs take place in some of world’s leading universities as well as in the comfort of the corporate boardroom. This training and development is very critical to the success of the board. These development sessions can take on many forms; workshops, presentations, seminars, conferences, use of resource material (widely available online) as well as community collaborations among companies seeking to exchange information and experiences.
The endeavour to train the Directors depicts the company as responsible with the shareholders, and the Directors and employees also see the company as deserving of their time and effort.
It is generally senior people who have been through a whole gamut of executive and corporate roles who fill board positions. Compensation is usually not the primary reason they sit on a board rather they are there for the intellectual stimulus and the learning that this position can provide. Therefore, giving them enough reasons to find the position challenging and interesting is every organization’s top priority.
Promote a candid and receptive environment where they can openly participate with their opinions. Encourage healthy debate and sincere questions. Do not allow board meetings to focus on the ideas and comments of one or two of the more talkative and vocal individuals rather encourage the entire board to weigh in. All of this defines the culture in the boardroom and functions to limit the Director turnover because a stressful, closed environment is rated as the number one reason Directors leave their jobs.
For small companies, a high turnover rate can be particularly damaging. Promote feedback and encourage Directors to find areas of interest to participate in. Give them assignments and tasks related to their skills. Set them up for success and watch them succeed!