Best Practices for Recruiting New Board Members
Three strategies for building your board.
Many private companies tend to recruit their board members from a pool of friends, family, and professional networks or via word-of-mouth. But when it comes to board membership, only those best suited to the role can truly represent the interests of the corporation and its stakeholders, while allowing for effective execution of corporate governance and objective oversight. A good board should include a diversity of perspective -- with members who can jointly oversee the corporation’s strategic initiatives while bringing their individual strengths to the table.
Learning Best Practices
Attend the Private Company Governance Summit June 5-7, 2019 at the Fairmount Washington, D.C., Georgetown, presented by Private Company Director, Directors & Boards and Family Business, to learn about director recruitment and other best practices in governance.
If you’re a private company owner or shareholder, you may find yourself asking: How do I find highly qualified individuals to join my board? When a board seat is empty and needs to be filled, keep these three strategies in mind.
Quality over quantity is key. It’s not just about filling all the seats at the table, but attracting people who can actually get the job done. Serving on a board is rewarding but time-consuming, and there is no room for passive membership when it comes to strategic decision making. Maybe you have interest from someone who intends to serve on as many boards as possible, something I like to call “overboarding.” No one benefits from filling a table with talking heads when a smaller, yet more productive team is what may truly be necessary to propel the corporation forward. Ask yourself these questions:
- Does my board simply fill blank space on the candidate’s resume?
- Is this candidate guilty of being spread too thin?
- Does this candidate add a key skill set or perspective to our team?
It’s sad but true: Women and minorities are largely absent from corporate boards. Lack of diversity in the boardroom is a significant problem and affects us all in more ways than we realize. In fact, decisions made by boards of directors can impact you, your community, and the country. A diversified board ensures a variety of perspective that can come only from people with different backgrounds and experiences. It promotes a variety of viewpoints when it comes to leadership tactics, problem solving, and curating unique and thoughtful perspective on the organization as a whole. A board should mirror the company it governs, including its employees and customers. Lack of diversity is reason enough for boards to reassess their structure.
In fact, a report entitled Why Diversity Matters by McKinsey & Company found that companies in the top quarter for ethnic and racial diversity are 35% more likely to see financial returns above their national industry median. Interestingly enough, those companies in the bottom quarter for gender, race, and ethnic diversity are less likely to deliver above-average financial returns than the average companies in their national industry median.
From a gender perspective, a Catalyst report entitled The Bottom Line: Corporate Performance and Women’s Representation on Boards found that on average, companies with the highest percentage of female board directors outperformed those with the least by 53% for return on equity, by 42% for return on sales, and by 66% for return on invested capital. The writing is on the wall -- diversity on boards is good for business.
So how do you find qualified and diverse candidates? Often, it’s about whom you know, but what about those you didn’t realize you knew? Simply put, networking today is at your fingertips 24/7 thanks to social media, apps, and other networking tools. Online networking helps expand your network and serves as a helpful complement to traditional in-person networking.
But let’s not fully discount good old traditional networking. Face-to-face connections at events, conferences, and social gatherings can present a world of opportunity you may have never known existed. Opening up lines of communication to a second- or even third-degree connection could lead to an excellent fit for the board position you are looking to fill. New ways of networking enable us to step out of our comfort zones and create meaningful partnerships that take our organization to the next level.
Effective recruiting for your organization’s board is dependent on selectivity, diversity, and networking. The responsibility of the board member is to try to make a difference while hopefully gaining professional and personal satisfaction in the process. If there is ever an opportunity to be selective, assembling a winning board is it.
Mark Rogers is the Founder and CEO of BoardProspects.com. As a nationally recognized corporate governance expert, Mark has lectured across the country on the topic of best practices in today’s boardrooms. Mark’s articles on corporate governance matters have appeared in numerous publications, including The Wall Street Journal, USA Today, Boston Herald, Los Angeles Times and The Boston Globe. He is also a regular contributor for Forbes. He serves on a number of corporate boards and is a Council Member of the Gerson Lehrman Group. Mark holds a Bachelor’s Degree from The College of the Holy Cross, and a Juris Doctor from Suffolk University Law School.