“Do you wanna build a snowman?/It doesn’t have to be a snowman…”
Well, unlike in Disney’s Frozen, we have no need to introduce a snowman character, so what if we built a new person for your private company board of directors instead?
I’ve participated in the search process for new board members at a few different private companies. I’ve also been on the other side, one of the people who was sought out and put through a selection and interview process.
One search I was involved with produced approximately 250 candidates from a combination of sources. The following steps describe the process the company (XYZ) underwent to find two great new board members.
There is no right or wrong way to conduct a director search and there isn’t a “one size fits all.” However, I think if the seven steps outlined below are followed, there is a strong likelihood that you will find and select the right person for your board.
The Need
The search for a new member of a private company’s board is typically caused by:
- A director’s resignation (this is what kicked off XYZ’s search).
- A director’s retirement.
- A director reaching an age limit.
- A director reaching a term limit.
- A change initiated by the company’s shareholders.
Who will be responsible for the search and selection process? The final selection should be made by the shareholders or a subset of the shareholders.
Who is responsible for the overall process? XYZ has a governance & nominating committee (GNC). The committee’s chairperson (me) was given the responsibility to organize and lead the search process. The committee’s direction was set by the shareholders (more on this below). If the company does not have this type of committee, then the overall search process responsibility should be assigned to a lead director.
OK, the responsibilities are clear. Now what?
Step 1: Analyze the Board’s Current and Future Skill Set
What is the “as is” composition of the board? In other words, what are the skills of the incumbent board members and what future skills are needed? One tool to help answer these two questions is to create a skills matrix document. The matrix was created by the GNC; don’t make this a freeform type of document that your fellow directors can interpret as they wish. The matrix is designed to highlight the desired individual skills, strengths, capabilities, gaps and demographics needed on the board now and in the near future. This can be a simple Excel spreadsheet or Word table. Each director should complete his or her individual portion. While this is a useful tool, it doesn’t have to be so detailed that it becomes a cumbersome exercise. No need to get carried away with this. A secondary benefit of completing this is the existing board members can be reacquainted with each other’s backgrounds.
Step 2: Create Search Criteria and Priorities
The next logical step is for the shareholders to craft and organize the detailed criteria and priorities for a new director. Here is one possible grouping to consider:
- Leadership experience. CEO or senior executive experience, company size, prior board roles, type of companies (e.g. family-owned).
- Industry and/or functional experience. Opportunity to add value via a variety of relevant or sought-after experiences. This section can target the future skill sets and gaps gleaned from the skills matrix.
- Diversity and demographics. Are you looking to enhance the diversity of the board? Are you targeting age, sex, race or geography?
- Other. Examples include possible need for advanced degrees, ability to attend meetings (should be assumed, but don’t), specialized certifications and more.
The detailed criteria in these sections can then be ranked as “ideal,” “high priority” or “A+.” Once this exercise is complete, let the full board review it for their input. The completed document is then ready to share with the people directly involved in the search.
Step 3: Activate the Search Process
The GNC had a variety of possible sources to post the opening and identify candidates. These included:
- Personal networking of the directors and shareholders.
- A retained search firm. XYZ retained an executive search professional to identify people that did not know anything about the role, connect with them and create interest separate from the postings noted below.
- National director groups, such as the Private Directors Association (PDA).
- Organizations and groups known to current board members that focus on placing women into board roles. Examples are Him for Her, the Stanford Women on Boards, Women Corporate Directors and The Boston Club.
- Linkedin. Yes, LinkedIn! Targeted searches based on specific criteria, keywords and hashtag scans can surface good candidates.
All of the people who were contacted via the sources above were provided with a summarized set of criteria developed in Step Two. The selection committee and the shareholders were not expecting all of the detailed criteria to be met. It was a guide. However, remember this when reading the last section of the article.
Step 4. Initial Applicant Screening
Be careful what you wish for! As I noted, this process produced approximately 250 candidates from the above-mentioned sources. To organize and keep track of the applicant pool, I in my role as GNC chair set up a Gmail account to receive the inquiries from the PDA posting and to later use as a means to communicate with the people who responded to the posting. We communicated with each person who applied. The GNC and the search firm set up a master Excel spreadsheet with a variety of tabs to track all of the applicants. This was regularly updated to reflect initial screening decisions on each of the candidates. Applicants were classified by our screening team as: FC (passed first cut), NF (not a fit) and OTF (on the fence). The search firm also did their own independent review of the materials submitted by each applicant and added their notes and classifications. The search firm began to reach out to individuals who made the first cut to have brief interviews.
Step 5: Narrow the Candidate Field
After the initial screening, the applicant pool was narrowed down to approximately 15 people for more conversations and interviews with the search firm and further screening by the GNC. This screening process yielded a pool of seven finalists. The search firm asked these individuals to provide further explanation of why they were a good fit for the board. Individual Microsoft Teams interviews were set up for each person with three members of the GNC, one shareholder and the chair of XYZ’s human resources board committee. The interviewing team developed a list of questions that were loosely “assigned” to the interviewers prior to the discussions.
Step 6: The Finalists
Two people were selected as finalists. Both were invited to XYZ’s headquarters for a brief tour of the corporate office and dinner with two shareholders (chair and CEO) and two GNC members. Given the positive nature of the conversations, both were asked to join the board. Final discussions were conducted by the search firm and the chair. The entire process took a few months to complete.
Step 7: New Director Onboarding
The process didn’t end with the final selections. The GNC and XYZ’s management developed an onboarding process and a new director onboarding guide. Individual mentors from the board were assigned to each new member.
You may be reading this and think all of this was too much. Could be, but the two selected candidates would not have been sourced from the board’s and shareholders traditional networking sources. We cast a wide net and it worked.
And now here are a few words of advice for would be director applicants.
- If you do not have any of the desired skill sets that are provided to you (samples documented in Step 2), do not apply. And don’t have your assistant send in your materials. That’s just bad form.
- Many of the detailed applicant materials (résumés, board bios and exhibits) were overwhelming. Just so you know, you do not have to include your summer job internship between the two years of business school that was over 40 years ago.
- Do not tell the search committee, “Your search is over! I am the one for XYZ!,” as two people did. Consider showing your enthusiasm in other ways?
- And, after the search is over, please don’t ask me how companies feel about passing on qualified male candidates in favor of diverse candidates. Yuck.
Jim McHugh is a member of the board of directors of Southworth International Group Inc. and Kennebec Technologies, founder and CEO of McHugh & Company Inc., and a member of the Private Company Director Editorial Advisory Board.