So we’ve established that boards, particularly at public companies, now need current, targeted competence, diversity, and shareholder responsiveness. They also need people willing to devote more time and effort to fewer boards, and who are prepared for today’s liability and oversight concerns.
This all sounds noble, but these new demands have upturned and strained our ability to find, vet, and add new board members. Selecting a director based on mutual country club membership at least allowed quick decisions. Now, the process of deciding the talent and attributes sought in a new board member, finding that talent, getting to the “yes,” reviewing vitae, multiple interviews, and assorted legalities stretches out for months. Some boards fuss over setting the perfect qualifications so long that they’ll never find such a perfect candidate.
The face-to-face aspects of director search are still in the learning stage too. Boards, headhunting firms, and candidates themselves are working to reinvent an interview and vetting process that differs in major ways from executive job search. Asking (and answering) the wrong questions in the wrong way still seems to be the rule.
Whining about how broken the director search process is, however, does you no good in crafting your own personal onboarding campaign. So how do boards actually handle the process? How should they? And how do you make them love you at first sight?
You’ll probably notice that the following ideas can bounce back and forth between what you should do and expect as a board wannabe, and advice for the boards making these decisions. That’s because the world of corporate governance is such a narrow one that both sides of the transaction are likely reading this. Telling board seekers what they should do to make the sale is important—but so is giving nominating committees hints on making the process more efficient (and giving wannabes an inside view of what boards are thinking).
This board “hiring” process is as opaque as most other aspects of the boardroom are, leaving even nominating committees unsure how to proceed. As with many of the questions I’ve been asked over the years, the tone is “How does everyone else do this? What’s normal?” One example—how long should a new director search take?
First, a few outside parameters. “A year would be unusual,” observes Paul Williams of the Allegis Partners search firm. However, he finds that director searches of six or even nine months are not rare. Patricia Lenkov, founder of Agility Executive Search, sees the average search taking six months, while Centerstone Executive Search CEO Kim Villeneuve says her board hunts require no more than three to four months (and that if it takes longer, you’re doing something wrong). These averages seem to hold for both public and private companies.
Sorting out how long a director search should take matters for both sides of the process. For board prospects sitting by the phone, a long wait with no word will tempt them to give up on the opportunity (and likely suggests that the board is disorganized). “If you wait six weeks without getting a call, that’s a bad sign,” notes Villeneuve.
But determining to make a board’s search process more timely is easier than actually pulling it off. Seeking an outside board member differs in critical ways from hiring, say, a CFO or other top exec. The part-time, amateur status of the board means the process of shaping a board job description; seeking, vetting and interviewing candidates; and coming to an agreement must all fit into the busy, sporadic meeting schedule of board members. “It’s a function of logistics,” notes Lenkov. “Just getting all these people together in one place is a big deal.”
However, there are tips boards can use to both speed and improve the search process.
- Use the nominating committee to best effect. Search pros find that putting a small group in charge of the search (rather than the full board) focuses effort and accelerates the process. Still, the nominating committee chair must crack a whip over everyone involved to assure the process doesn’t bog down into everyone endlessly “coordinating their calendars.” The committee chair needs to follow up on the calling, checking, and paperwork needed between meetings. Also, since boards are ill-equipped to handle this sort of busywork, they must make smart use of company staff for reference checking, logistics, and other tasks that HR departments do well.
- Start with a smart “shopping list.” A bad approach is heading off with a vague idea of what the board wants in a new member and then wasting time window shopping various prospects to flesh out what is and isn’t sought.
- Better approach—“align board expectations from the start,” says Villeneuve. Invest committee time and effort up front into arriving at an agreement on the “must have” factors sought in a new director for skills, experience, achievements, availability, and so on. Only then does a smart board start its prospecting. There’s a reason grocery shopping without a list takes longer and costs so much more.
- An addendum to the above item—when shaping a list of candidate qualifications, a wise board keeps it tightly targeted and includes far more “likes” (items the board can bend on) than “musts.” “Avoid too many filters,” says Villeneuve, who recalls lessons learned from a director search her firm handled. The board demanded a currently active tech CEO who was a Hispanic or Asian woman. Just finding prospects who met all those tick boxes took forever—and none proved available.
- You’d expect the experts above, who work in search firms, to advise hiring such an agent to manage a board hunt. Yet headhunters can help widen the search pool (especially for diversity candidates) and aid in formulating a well-thought-out search profile. (And, as we saw earlier, smart board wannabes keep themselves on the search firms’ radar, making everyone’s job quicker and easier.)
There is another time factor that comes into play in seeking board candidates. This is crucial intelligence for the board wannabe but too little considered—when board searches are most likely to happen. Melissa Henderson, of Summit Executive Resources, works for execs seeking opportunities, rather than the other way around, and some of these opportunities include board seats. Henderson raises a matter that’s vital to any effective board-wannabe effort—the board-search calendar.
“For any board opportunity, you should start work at least three or four months in advance,” says Henderson. But how will you know what “three or four months in advance” is if the first you learn of a board vacancy is someone else being named? That’s when it helps to know how the process is scheduled.
For big public companies in the United States, there is typically a six-month cycle in seeking new board members that climaxes in May with board elections (fitting in with the typical proxy/annual meeting calendar). This means that, if a big company on your target list has directors coming up for retirement, your sweet spot for prospecting starts the previous October or November. This is when you make a friendly call or email to your contacts in the company.
Henderson says a good first touch-point is with the general counsel, who, along with (or even as) the corporate secretary, handles much of the initial board-search busywork (usually then delegating to HR). Chatting up the board chair and chair of the nominating committee around Halloween is also timely. The board is building a shortlist of nominees then, and this is typically finalized before Christmas, with vetting and interviews in January and February. Put in some time studying company proxies to learn when directors’ terms end or who may be on the way out.
- Some companies may use a different proxy calendar, with new directors announced around October. In that case, just flip the above timeline by six months.
- The calendar above is based on the normal flow of board tenure and annual meetings. Board vacancies prompted by death, resignation, or a major restructuring will, or course, be far more random. If you’ve built contacts in the company, you may be able to gain a heads-up when such governance lightning strikes, but if you read about the sad death of director X in the newspaper, the board may already be reviewing replacement finalists. (If you think this sounds a bit like the old New York City trick of reading obituaries to find apartments that are suddenly coming available, you’re right.)
- For privately held companies, such as family businesses, venture or private equity-backed firms, and so on, there is no calendar. Here, you’ll need to have a network of contacts in place and regularly stay up-to-date with them. But watch for trigger events that could lead to boardroom movement. Is a family patriarch about to retire? Has there been a sudden CEO change, especially with an outsider taking the reins? Has a big merger, acquisition, restructuring, or round of funding been announced? All of these can be Step 1 in a coming boardroom shakeup and a good moment to show your interest. These private company boards tend to move faster with their searches, too.
- Timing your efforts is an important element of the board-wannabe campaign, and one that requires commitment and follow-through. Henderson notes that she recently helped place two of her clients on the board of a major U.S.-based corporation after long months of effort, including regular check-ins with the company counsel and board contacts. Are you willing to stick to such a schedule in pursuit of a board role that may (or may not) be available for six months?
Let’s be optimistic—assume a board and its nominating committee are doing everything right in their director search. How will they handle the process? At Boardroom INSIDER, I advise both sides of the board talent hunt relationship. Here is a Q&A with consensus on current best practice for vetting and reviewing board candidates.
Q: I’m a corporate counsel and secretary with a large regional transportation firm. We’re restructuring, with several carve-outs and joint ventures. We’re in the process of naming new boards for these ventures, including some value-adding outside directors. Our parent board has worked to upgrade its governance in the past several years and wants to do a good job of selecting new candidates. We have some good prospects in mind, but I’m wondering—what is the current best practice when it comes to reviewing board candidates’ backgrounds?
A: Given that yours sounds like a larger, sophisticated company, you already have just the expertise you need—in the HR department. Too many boards still approach background checks for director prospects as a quick formality. This tack has become more dangerous in a number of ways. If any of your new ventures should go public, a director’s past legal or regulatory problems will need to be disclosed. Put your HR pros on the case to head off such troubles.
Start out by asking board candidates to sign a waiver authorizing you to access any records or personal references you wish. This not only opens some legal confidentiality doors but also gives you a clue to the prospect’s openness. If they hesitate to open the kimono fully for investigation, wonder why.
Now, put your HR staff to work on a proper background and reference check for new directors as you would for any other new top hire. “Check professional affiliations, ongoing employment, and other board involvements,” counsels James Rowe, a co-managing partner with corporate investigation pro, Mintz Group. “What other business entities are they involved in, what is their work life like, where is their income coming from, and what are their time commitments?”
Rowe notes that smart use of the Internet and determination can help any HR department properly vet a board prospect. “Look at news coverage, litigation, and regulatory issues.” Carefully checking education and criminal records to assure they match the vitae the candidate provides is a must also. If your board prospect claims a degree from a college he only attended for a few quarters, this is the time to find out. (Hint for board wannabes—this suggests that nominating committees will be combing your online presence for verification. Do all of these sources agree?)
Rowe suggests a winnowing process for such digging—basic background checks for initial prospects and a deeper dive into the background of finalists. Find out where these prospects lived and worked to guide your vetting. Rowe notes that much in the way of legal records is still inaccessible online and may require a personal visit to local government offices (vetting overseas is even more likely to require site visits).
Board-Seeker Action Items
- Go back to your “wish list” of companies whose boards you’d like to join. If public companies, research who chairs their nominating/governance committee. For private firms, consider a call or email to the corporate secretary asking how they conduct board searches.
- For these and other companies of board interest, search for current or pending realignments (CEO shifts, family retirements, changes in control, spinoffs, joint ventures, etc.). Be aware of the board-change potential from these.
- Use your preferred online search engine to search your name. Try variations with middle initials, and including your company name. Search also on “news” items. Do the results provide a reference check you’d like? Are there any info gaps or conflicts?
- Now, ask a mentor or network member to try the same “reference check” themselves (also send your board résumé). What is their impression of your boardability based on this? What do they see as missing or counterproductive?
- You likely have network members who will be named to boards themselves. When they are, ask if you can chat for a few minutes on how the process worked for them, timelines, and do’s and don’ts while the onboarding experience is still fresh in their minds.