Building A Board
Start with a tailored skills matrix; and look for directors with keen intellect, low ego
By Barbara Spector
To build the best board for your business, don’t try to duplicate other companies’ governance structures.
If you want to find great directors, your first step should be to create a skills matrix. List the abilities and experience of your current board members and identify gaps you must fill to ensure the board can help your company achieve its strategic goals.
“A skills matrix links the board’s strategy to the [director candidate] profiles that you look for,” says Lee Ann Howard, founder of Howard & O’Brien Executive Search.
“You can’t copy someone else’s board and think it’s going to be right for yours, because you’ve got to look at where your organization is in its evolution and at the future you’re trying to build,” Howard points out.
“Everyone talks about diversity from the standpoint of the typical things — gender, race, even, to some extent, age. But what’s really important for all the boards that I serve on is diversity of thought. We want people to ask questions that management hasn’t necessarily thought of,” says Lynn Clarke, chair of Neilsen-Massey Flavors and Talalay Global Mattress and an independent director of Abarta Coca-Cola, Top Notch Distributors and visii.com.
In addition to needed business experience, director candidates must have the interpersonal skills to promote productive discussion.
Boards should interview candidates as a group to see how the individual would fit into the existing board dynamic, Clarke suggests.
“Low or no ego is really important,” she says. “Everyone has an ego. But what do you do with it in a boardroom? Do you lead with it?
“If you really are a good board member, ego is the last thing that anyone recognizes about you. Because you’re not in charge there. You’re there to help.”
There should be chemistry among board members, Clarke stresses. “You want to be in the room with people that you enjoy being with. Because there could be a situation down the road where you have a crisis, and you end up spending 24/7 with all these board members for a period of time.”
Discussions in a less formal setting, such as over a meal, can help determine whether a candidate is a good fit.
“The people who are curious and excited and want to know — those are the people we want. Those are the people we want to be around, both personally and definitely on the board,” says Jonn Herschend, education chair and member of the owners council at Herschend Enterprises. “Because that keen intellect, that curiosity, that excitement, is contagious.”
Herschend’s board recently added three new directors in a move that marked “a big transitional moment for us.” The two second-generation leaders who had built up the business decided to step back from management and the board. Attractions and properties under the Herschend umbrella include the Harlem Globetrotters, Dollywood, Silver Dollar City, Chuggington and Splash & Bubbles (with the Jim Henson Company). Herschend has more than 12,000 employees and hosts more than 14 million visitors annually.
“It was time, it was felt, to bring some new energy and some new faces and some new ways of thinking,” Herschend explains. In the past, the company had found directors through connections. This time, the business engaged an international search firm.
“We came back with three key candidates, and we thought all three were amazing,” Herschend says. Although only two new directors were needed, the company decided to bring all three aboard. Two of the three are women.
The board’s governance committee kept shareholders in the loop throughout the director search process. “No one was left in the dark. Because, at the end of the day, shareholders were going to see a recommended slate,” he explains. “We wanted them to be comfortable with it in advance.”
The role of culture
Herschend board candidates met informally for meals with a shareholder, a director and someone from management. “In that process, we got a better sense of who they were, and they got a better sense of who we were, and what we were expecting from them,” Herschend says.
It was important for everyone to assess cultural fit, he explains, “because culture is extremely important to us. It’s one of our greatest assets.”
Clarke suggests that board candidates visit the company’s stores or facilities or call the customer service department. If the business is the main employer in a small town, consider visiting the town, she recommends. “It’s important to really understand the business and the cultural aspects of the business.”
When working with a search firm to find directors, take the time to fully educate the firm on the culture of your organization so the firm can represent it properly to candidates, Howard advises.
Avoid ‘overboarded’ candidates
Directors should be expected to attend every board meeting and arrive fully prepared. Candidates who are already committed to several boards may not devote enough attention to yours.
Clarke knows of a family business that hired a “star” director — a well-known figure in their industry who ran their own multibillion-dollar company. The “star” missed a lot of board meetings.
“You can’t miss a meeting, and you can’t be late for anything,” she asserts. “You have to know, as a director, that no matter who you are, those are just absolute basics. Because every other person on that board is also a busy person.”
While Herschend Enterprises sought high-profile directors, “We were very specific in saying we did not want someone who was overboarded,” Herschend says. “We wanted someone who would give us their focus.”
As it turned out, “All three board members who came on immediately jumped right into the conversation and began contributing from Day 1,” Herschend says.
• Develop a skills matrix, which is used to determine skills and experience of current board members as well as to identify any gaps.
• Also identify “soft” skills, such as personality traits and behavioral competencies.
• Assess whether candidates have the time to commit to board meetings as well as the preparation time needed prior to the meetings.
(This article was adapted from a session entitled “Finding Great Directors” at the Private Company Governance Summit 2019, held June 5-7 in Washington, D.C. Speakers were Lynn Clarke, chairman of Nielsen-Massey Flavorings and Talalay Global Latex and board member of Top Notch Distributors, visii.com and Abarta Coca-Cola Beverages; Jonn Herschend, education chair and member of the owners council. Herschend Enterprises; and moderator Lee Ann Howard of Howard & O’Brien Executive Search.)