Would you like a spot on a corporate board?
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Would you like a spot on a corporate board?
It’s a smart move for experienced executives looking to make an impact with their business and leadership skills. A corporate board position can be lucrative; but even if you’re on the board of a nonprofit or startup, sitting on a board boosts your credibility and reputation, bringing new career and business opportunities.
This is an issue that interests many of our clients, so I recently interviewed two executive recruiters: Mark HuYoung, managing partner at NorthWind Partners, and Karen Edwards, partner at Boyden. We talked about what is involved in getting on a board, and how executives (especially female executives) can position themselves for board roles.
Board positions have traditionally gone to current or former CEOs of larger businesses – people who will impress Wall Street and who already have working relationships with the current board members. “Oftentimes current board members simply looked to their left and to their right at other board meetings and invited those same people to join. It was a bit of an old boys’ club,” says Edwards. “Even when they used an executive search firm, it was often to validate someone they already selected.”
But things are changing. Complexities that come with today’s technologies — cybersecurity and the rise of social media, for example — mean that someone that has been a CEO for 20 years or has been retired for a while might not understand the issues that are critical to today’s businesses.
“More and more boards are considering candidates who haven’t yet been a CEO,” says Edwards. “Perhaps they have been working with the board as general counsel, CHRO (Chief Human Resources Officer), or CFO. Some of them are great diverse candidates, highly qualified executive candidates, but they haven’t had the title of board member yet.”
Boards are also coming to appreciate the value of diversity. Studies from McKinsey and others show that companies with a more diverse board deliver better financial returns. “Organizations are made up of men and women, so creating gender diversity means you get diversity of thought and direct representation of your stakeholders,” says HuYoung. “Both of these things make a company flourish and, ultimately, become more successful.”
Some of the movement towards diversity is voluntary, but certain jurisdictions are making a more active effort to speed diversity. California Senate Bill 826 requires every publicly held company in California to have at least one woman on its board of directors by the end of 2019.
Board Positions: What Companies Are Looking For
These changes mean more opportunities for potential directors. So, what do executive recruiters and nominating governance committees look for when evaluating potential board candidates?
“When we begin a search,” explains Edwards, “we will create a matrix and look at the skills currently on the board and what they want to add. That is used to guide the process.”
“There is no ‘one size fits all’ criteria,” HuYoung adds, “The most important thing to consider is context.”
1. What stage of the business lifecycle is the company in?
“We consider five stages: startup, accelerated growth, turnarounds, restructuring, and sustained success,” says HuYoung. “Ideally you want someone who has been one step ahead and has grown a business through the stage you are currently in. So, for example, if the company has $20 million in revenue and is growing at 20% a year, the ideal person for its board would have grown a business from $20 to $100 million multiple times and been involved in an exit. The ones who have done it in recent history will be the ones who can help you get there efficiently and effectively.”
2. What role does the company need to fill?
“As you define the framework of your board, you need to consider function,” explains HuYoung. “You wouldn’t put someone with deep sales experience as head of your audit committee.”
3. What industry is the company in?
“You don’t always need to recruit someone from your industry, but there is a danger in bringing in a board member who is too far afield,” HuYoung explains. “For example, if you are in construction and engineering, and you bring in a former CEO from a traditional luxury retail brand, that person will have general business acumen but might not understand the nuances of your industry. Instead of retail, the company might consider business services or project management — something that has closer parallels to what they do.”
4. Will they fit the company and board culture?
Companies also look for directors who mesh with the other board members and are comfortable interacting in the way that is accepted at that company. In some cases, that might be “someone with sharp elbows,” states HuYoung. “But for a family business, perhaps they need someone who is an influencer and persuader.”
“You want someone with the right style,” says HuYoung. “They should come across as a coach and a good sounding board, but also bring a level of confidence; someone who can come into a board meeting and say, ‘the baby’s ugly but here’s what we’re going to do.’ Or if nothing’s wrong with the baby, where and how it needs to be fed to grow.”
5. Does the candidate have a level of passion and dedication to the company or cause?
While some businesses want to have people with a high profile sit on their board, it’s important to be realistic about how much they will be able to contribute, especially if they already sit on four or five boards. “If you are willing to remunerate someone to just be a name and don’t necessarily expect them to add significant value, that’s fine,” states HuYoung.
“The best candidates are the people who are excited about your business, understand the situation and its challenges, and are able to help you get there,” says HuYoung. “Those are the value-added board members.”
How to Position Yourself
Look at your expertise from the perspective of the board and determine how to package yourself so it is easy for board members to see what you bring to the table and how you will fit into the framework of the board.
“Your first board is likely to be a smaller company, and the board is likely to choose someone they know,” says Edwards. “They might be looking for someone with specific experience, such as cyber or audit, but they may just be looking for a CEO with experience in the industry.”
“CEOs want other CEOs on the board because they will understand what the CEO position looks like and they will have useful advice to share,” states Edwards. “But there aren’t enough CEOs to go around, especially if you want diversity on your board.”
“One board I was talking to was specifically looking for a woman to join the board, and they found a great woman, but she was already on five boards,” adds Edwards. She recommends reaching out to people like that. Their visibility means people are likely contacting them regularly about boards, and if they like you, they can make referrals.
“When we were filling a recent board role, we talked to 50 CFOs who had taken companies public in technology, professional services, and business services,” says HuYoung. “It’s important to touch the whole market. If you have enough conversations, people will start telling you ‘I’d be a good fit for this, but Bill would be perfect.’ That kind of triangulation is useful. We know we have done our job well when we hear two or three people recommend the same person.”
Will executive recruiters and nominating committees look at your LinkedIn profile? Yes, say both Edwards and HuYoung. Social media checks mostly come into play in the research stage of a candidate search, with LinkedIn topping the list of platforms to review.
“We are always looking at LinkedIn, searching people on the Internet to see what there is about them,” confirms Edwards. “They don’t necessarily have to say on their profile that they are interested in a board role. If they are the CFO of a substantial company, any board is going to be interested. Everyone needs an audit chair – it’s not ideal to ask someone to chair right away but sometimes that’s the opportunity. If I see someone with cyber experience, they don’t need to tell me they are interested in a board position.”
Recruiters look for people who are relatively engaged, meaning they not only have a LinkedIn profile that’s reasonably up-to-date, but are commenting on posts, writing thoughtful blogs, and have been quoted in articles.
“We want to see a reasonable level of activity and engagement in the market; it’s a litmus test of how on top of trends they are,” says HuYoung. “If their profile is old or there’s no recent activity, we wonder how engaged they still are in the industry.”
A clean LinkedIn presence is also important, showing a level of savvy and thoughtfulness. It doesn’t look good if a candidate has multiple profiles, according to HuYoung.
Spend time on one clean profile, making it attractive and interesting. Know what story you’re trying to tell and use your LinkedIn profile to tell that story and craft your personal brand.
Spread the Word
If you’re currently looking to join a board of directors, both Edwards and HuYoung agree that the most important thing you can do is work your network.
“Tell everyone you know that you’re interested and why you’d be a good fit,” says Edwards. “Companies do their due diligence when looking for board members, but they also get referrals. It is very much of a networking process.”
For those who are not currently CEOs, Edwards recommends having a conversation with your CEO about this being a goal you want to achieve. In fact, she says, “This can be part of your development plan because this brings you the perspective of how things are done in other companies. It might not have occurred to your boss that you would be interested, but it could be a fruitful conversation. Your CEO could recommend you to a board.”
Talk to other people who are on boards and if you have good relations with an executive recruiter, let them know, too.
Make connections, share your skills and qualifications, and become expert at articulating your personal brand. In time, you’ll be pulling up a seat at the boardroom table.