8 Lessons Learned from Private Company Board Searches
I work with closely-held and family-owned companies across multiple markets with a broad range of management sophistication. Over the last 25 years of succession and governance consulting, I have helped boards find directors. Independent director positions are hard to fill. Private company shareholders usually develop their own list of candidates, using key advisors, associations and friends. A search process typically involves people they personally know.
My lessons below are from working with their process to help them.
Lesson #1: The typical search selection process favors people who are well networked and have friends on boards who will invite them when an opening exists. Trust is so important here. If you don’t have a network, don’t expect to get on a board quickly.
Lesson #2: It takes time and money to build a network. If you are seeking a board seat, you need to plan on spending over 300 hours a year in networking, and $7-15,000 over three years to build your network, educate yourself and find the right boards. Attending one conference is over $2,000 for registration, airfare, hotel and meals. Buying lunches and breakfasts add up, too! Professional association dues can be even more. Not investing in networking is why so many people can’t find a board seat to fill.
Lesson #3: Your resume or CV can be a tool for boards to deselect you. You need to have a board CV, not an employment history. When I share this observation with those not selected, some are shocked and others offended that their CV was rejected by shareholders. In the meantime, there are thousands of CEOs retiring every year who seek those few available seats. This is a very competitive environment. You have to ask yourself if you are making a strong investment of cash and time to succeed.
Lesson #4: Interview skills are another key to selection, as much as your network! When I witness highly qualified director candidates interviewing with savvy shareholders, it can be striking how bad their interview skills are. I’ve had shareholders tell me candidates’ backgrounds were excellent, but their personality and interview skills were a turn-off. As one chair put it, “Jack, this was a great experience for me as I now realize how important the interview process is for determining fit and chemistry, not just talent.”
Lesson #5: Know your market and your fit. There are five primary groups or levels of director experience typically found on boards of closely-held companies: people are current or former officers of the company, including family, who attended board meetings; family board members who don’t work in the business; company founders and CEOs who may preside over a board that includes family members or internal employees; professional advisors who have or have not worked in the business; professional board members, those who are former executives, who usually sit on many boards as a full-time pursuit. I am sure there are other profiles, but for the typical private company board member, these are the common groups or levels.
Typical private companies with boards have a minimum of about 50 but may exceed 5,000 employees. Obviously, there are more companies with 50-500 employees than there are with 5,000 or more. The needs and levels of sophistication are also different. For those seeking a minimum board retainer of $25,000 with $3,500 meeting fees, the number of opportunities shrink tremendously as compared to searches with $7-12,000 retainers and $1,500 meeting fees. Those who want the big bucks need to invest big bucks in networking. There is a 1-to-1 correlation between investment in networking and the retainer. So, it is important to know the board's composition, typical board compensation, and position yourself as a fit to their condition. If you don’t figure this out, you will be frustrated.
Lesson #6: It is not how smart you are as it is how collegial you are with others. Some highly successful people come with an attitude that shows up in spades in the interview process. A comprehensive interview process can be somewhat brutal and for some a key lesson of why it is so tough to get on boards. While it will be clear how smart you are, once you open your mouth, your ability to express collegiality, charm and connection with the interviewers will help differentiate you.
Lesson #7: There is turnover in board seats. I have colleagues who called me to say they were winding down their board memberships because it was time to move on. That means there are opportunities for people to find open board seats. It is important to understand the target board’s composition to help frame your fit and chemistry. Are you replacing someone’s profile or adding to the talent pool?
Lesson #8: National searches mean the trust issues have to be settled very quickly. Risks rise when you don’t know someone. If you do get a lead, offer at your own cost to fly out to meet them. Or suggest a convenient “meet you halfway” airport to arrange an in-person meeting. Headhunters get paid by the client, so they want resumes. Many companies find directors “for free” through their own networks.
If you are seeking a board position, educate yourself on governance best practices, join several networks that will expand your circles of influence, and spend money to improve your network. If you are not spending at least $3-5,000 a year on this, are you investing enough to succeed?
Jack Veale is founder of DirectorsMarketplace.ORG, an online community of carefully selected private company directors whose members seek open board positions. The website provides online training to boards and their fiduciaries. Jack is a fellow of the Family Firm Institute and founder of the Connecticut Chapter of NACD. He recently authored "Creating Strategic Innovation," and has been forming or advising boards for over 25 years. Jack is also founder of ESOPMarketplace.com, TrusteeMarketplace.ORG, FamilyBusinessMarketplace.com and PTCFO.com. Jack can be reached at email@example.com.