By Susan F. Shultz and Robert Barker
Directors and Boards Magazine, December 2014 E-briefing
Call it the boardroom Catch-22: It’s difficult to get on a board if you don’t have board experience. But, you can’t get the experience without your first board seat.
The solution? If you’re really serious about getting on a board, create a strategy and be prepared to do the homework. Getting on board is like getting a job. Here are three steps.
- Make Sure You Are Qualified
Serving on a board, particularly a public board, requires a certain level of professional experience and achievement. Regardless of your area of expertise, you need to have the gravitas that inspires confidence in fellow directors and assures them you will be a valuable colleague and partner in discussions and decision making.
“Professional reputation is really the cornerstone,” says Mary Anne Harlan, who serves on the Gorman-Rupp Co. board. “If you’ve done the hard work and have a reputation as someone who thinks strategically and would be an asset in the boardroom, that’s really the first step.”
Increasingly, significant operating experience is important. The most desired backgrounds and expertise, in order of preference, are active CEO/COOs, finance, industry specific, international, and minorities and women. As boards recognize escalating cyber risk, digital media and IT expertise are becoming more important.
Be clear about the type of board you are qualified for:
- Do you have special industry expertise—manufacturing, financial services, technology, medical devices, energy, retail? Experience in other sectors?
- Do you prefer a certain geography? East Coast? International?
- Do you have particular experience—perhaps in companies with multiple locations, a regulated industry, mergers and acquisition, IPOs, global?
- Do you have domain expertise—perhaps in finance, legal, marketing, sales, social media, mergers and acquisitions? Or in an area that would be especially helpful on the board committees, such as audit, compensation and/or governance? At present, executive pay is the primary focus of shareholder activists, so compensation knowledge is especially helpful.
- The most important thing a board does is ensure that the right leadership is in place and has the resources to be successful. Do you have significant human relations experience? Have you been engaged in strategic planning that provides the context for evaluating your CEO and her successor?
If the word “network” makes you cringe, it’s not going to be easy for you to acquire a board seat. Surveys show that two-thirds of public companies recruit directors with the help of executive search firms. However, the primary resource is current board members (over 90%). So, despite an increasing reliance on search firms to recruit directors, many of those directors are identified by word of mouth—by referrals.
Meet with those who can help you acquire a board seat and be clear about your objectives and criteria. As noted, the best referrals are directors, ideally those who currently serve on the type of board you are targeting. Other influencers to contact for board seats include corporate attorneys, audit partners of accounting firms, commercial and investment bankers, venture capitalists, board advisors, corporate officers, and others who work with boards of directors.
Do your homework and identify specific companies on whose boards you could add value. Make a list of 10. Be diligent about researching the companies and their management teams and directors. Find out who their outside auditor and law firm are. Then use this information to identify possible connections to people you know who might be able to provide an entrée for you. Your goal is to be referred through networking until you reach a critical decision maker in the boardroom, such as the CEO, board chair, head of the nominating/governance committee, or another influential director.
- Be Visible
All boards expect that new directors will be experienced business people who understand strategy, how to read a balance sheet, and have demonstrated the ability to be consistently valuable, yet collegial, in the boardroom. But, beyond that, they seek a competitive advantage, a unique benefit.
One goal of networking is to showcase your expertise. “I tell people if you’re really interested in being on a board, try to find an opportunity to speak at a professional conference,” says Catherine Allen, chairman and CEO of strategy consultancy The Santa Fe Group. “If you possess the expertise to speak at these events, or to have articles you’ve written featured in the agenda or in a business publication, you can begin to make your name and experience known.”
Establish your credentials as an expert. This includes sharing anything relevant that you have published, such as speeches, interviews, academic, business, or community recognition as well as degrees from prestigious institutions and your track record with leading companies. Ideally, if someone Googles you, your credentials will be apparent.
Being known as an expert in a particular industry or functional area that the board has identified as highly desirable is a key advantage. “Gaining that sort of visibility, even if you don’t know anyone on the board, is important,” says Allen of The Santa Fe Group. “In our nominating committee discussions, we’re talking about that all the time—who has the expertise we’re seeking and can add value?”
Gender and ethnic diversity are desired and underrepresented, although not apart from the basics required in a good director and specific competencies the board needs. There is no longer room for tokenism, but, all other things being equal, 50% of boards would like to add more women and minorities.
Ultimately, gaining a board seat is a combination of unflagging persistence, timing and luck. The rewards can be immeasurable. As corporate governance continues to improve, board membership will become even more fulfilling—and critical to success.
Susan F. Shultz founded The Board Institute to improve and benchmark boards of directors through independent, web-based evaluation and education tools. She is the author of “The Board Book: Making Your Corporate Board a Strategic Force in Your Company’s Success” (AMACOM, 2008).
Robert Barker is managing partner of BarkerGilmore, an executive search firm specializing in the recruitment of general counsel and chief compliance officers.