I am often asked by friends and colleagues how to get on a private company board. I recommend MLR Media’s educational modules and conferences, such as the Private Company Governance Summit, as well as those conducted by NACD and the Private Directors Association. These organizations, programs and conferences can help one build the foundational knowledge to be a successful director and serve as a network to source board opportunities.
I encourage those who ask to be clear on what specific skills they could provide as a director and to which specific industries and companies they can add value. I also ask what they hope to derive from being on a private company board. For those primarily looking to gain financial rewards, I refer them to our Private Company Board Compensation survey, which we conduct in partnership with Compensation Advisory Partners. While fiduciary boards of the largest private companies pay similarly to public ones, board fees paid by most private companies are significantly lower. Even though the pay should adequately compensate for the time commitment, which is now significantly more than it was in the past, those seeking a board seat primarily for financial reasons may disappoint both the company and themselves.
Those looking for interesting opportunities to help improve private companies fare better as directors. We use the term board service for a reason. Serving on boards can create value for all stakeholders of the company and help strengthen our economy. Candidates with these motives are typically better directors.
However, the reality is that the best way to get on a board is by being on one. The experience one gains through board service can add value to other boards. Of course, this chicken-and-egg issue limits the opportunities for both younger and more diverse individuals who do not yet have board experience. And every current director obviously started somewhere as a first-time director.
Numerous boards recognize the value of first-time directors, many of whom are younger. A long-time director I know recently commented that he was looking for directors who understood all the commercials shown during the last Super Bowl, which were filled with ads from crypto and electric vehicle businesses. Younger directors may be better able to relate to certain client and employee segments and see some trends and themes more clearly. And if they lack corporate board experience, certain skills can be developed elsewhere to prepare them.
Perhaps the most important prior experience is having participated in CEO and C-level searches and succession planning processes. This is one of the most important fiduciary duties of boards. One place this experience can be obtained outside the corporate world is on boards of nonprofits, where the governance structure may be different, but the CEO selection and succession planning process is also paramount.
As more and more private companies recognize the value of having a board, there will be a large need for quality directors. And I remind those looking for board seats and those looking to build boards that potential board members who can articulate how they can impact the company and have the right motives for serving are the directors who can contribute the most value.