Many corporate executives aspire to a seat on a corporate board. They want the opportunity to learn from peers, add value, and challenge themselves. However, with a limited number of board seats available and different organizational processes, achieving this goal can take time and effort. What is the process for joining a corporate board?
A recent piece from Spencer Stuart looks at steps you can take to position yourself for a corporate board directorship, regardless of whether it is your first time applying or you’ve already held a seat.
Board seats don’t open very often, and corporate board turnover is typically very low. Continuity is valued but must be offset by fresh thinking and perspectives. The article states that less than 10% of directorships are new in any year.
One recent trend is that boards have increased the number of independent directors. These people have no professional, social, or personal connection to the company or its employees. Boards also consider what skills they need for the future. Global economic conditions have made for an increasingly complex and uncertain path in the coming years, and boards are looking for candidates who can contribute across various disciplines. Unsurprisingly, candidates with a background in operations or finance are top choices of executive recruiters.
The typical tenure of a sitting director is eight years for S&P 500 and S&P MidCap 400 boards. When the board is ready to appoint a new director, they will do their research together with their executive recruitment partner. At the point, that someone is contacted for an opening, “your background, skills and capabilities have been evaluated by the nominating and governance committee and deemed of interest. Since professional backgrounds and skills are table stakes, how you fit within the culture of the board and whether you will constructively add value have become leading factors in selecting an individual to join a board.”
Cultural fit is of the utmost importance. When considering the soft skills the board is looking for to fit in and add value, finding the right person is as much an art as it is a science. For example, does the candidate understand the role of directors versus management, or can they grasp strategic issues quickly? Directors will also want to confirm that the candidate has the right personality fit for the board and the organization.
If you’re considering positioning yourself for a corporate board directorship, your level of preparation may be the difference in getting a seat. According to the article, the following steps can help you reach your goal.
Educate Yourself
This should go without saying. You should be thorough in your discovery process about the company. Making sure you do your due diligence is the first step and will require significant time and energy to assemble your dossier. Your research should include the existing board, the industry, and the company. Preparing a SWOT analysis is a great way to understand how the company is doing and what others think of its prospects. This will also help you demonstrate how your previous experiences, both good and bad, shape the way you believe you can contribute to the board.
If the company is publicly held, you can read its 10-K filings, 10-Qs, and 8-Ks to dive deep into its financial performance and risks. You can also listen to its quarterly analyst calls and read rating agency reports. Looking at the historical stock price over the past few years, you can see how the company performed relative to the economy and its competitors. Another step to take in doing your research is to talk to your colleagues about their insights into the industry while maintaining confidentiality about the board opportunity.
If the company you’re interested in is privately held, accessing information on performance and financials will be more difficult. You’ll want to review as much information as possible from their website and any articles from reputable sources you can find online. If there are review sites available, they are good places to see what their customers say about them. If you are in communication with the company already, let them know you’d be willing to sign an NDA (non-disclosure agreement) to fully understand the current situation and how you think you can support them in the role.
Learn about the executive team, directors, and board governance practices/policies
Understand the current management team and existing board members as part of your due diligence work. Research their background, education, and work experience. Listen to or read any interviews or articles they have been featured in, written, hosted, or participated in. By getting to know them, you can position how your skills complement theirs and the value you can add to the team.
Understanding their governance practices and policies, which differ from company to company and provide a window into their culture, will also help you be more effective from day one.
Suggestions from the article for finding this information include the company’s website corporate governance pages (if they are public), which should include the executive team and current board members, their bios and tenure, corporate governance guidelines, charters, and related information.
Information on publicly held companies can be found on their proxy statements (DEF 14a on the SEC’s Edgar system). Information may include compensation, board schedule, committee structure, and related information. Past voting information can also be found on the SEC’s Edgar system, item 5.02 on Form 8-K.
Focus on how you can contribute to this company and board
Arguably, the most critical consideration in filling an open corporate board directorship is how the new person can fit with the existing directors and executive team while adding value in new and different ways than is currently represented on the board.
Sitting directors will also assume the new person will understand the expectations of a board member and quickly integrate into the company culture. Your approach should focus on how you can contribute to the company in the near- and long-term. It’s important to remember that while interviewing you, they are less concerned about you and more about how you can help the company. If you get too focused on the personal gains of a position, you lose sight of the organization’s actual needs and how you can be part of something bigger than yourself, which is a far more rewarding lens through which to view the opportunity.
An exciting aspect called out in the article is that compensation is most likely set and not a negotiable item. If that is a primary driver of your desire for a corporate board directorship, you should reconsider your motivations. The article also provides an excellent list of questions to consider in helping you figure out how you can add value.
Does the board fit you?
It’s important to remember that just as they are interviewing you for a directorship, you are also interviewing the company to ensure it is the right fit for you. It’s essential, to be honest about whether the opportunity is a good fit for you. Just because you’re being considered doesn’t mean you should ignore warnings that it may not be for you.
Use the interviews to assess the culture, dysfunctions you may sense, reasonability of expectations, and how the opportunity aligns with your skills and experience. As noted above, board directors serve for several years together, so considering how you feel about the other members is essential. The article also contains a list of questions you can ask during the interviews to help you decide if the fit is right.
You would not be a candidate if the board-nominating committee didn’t think you would be a good fit. They have done their due diligence in considering you. By preparing yourself thoroughly and thoughtfully, you can be confident you’re showing up with your authentic self and putting your best foot forward for the role.
If you would like more information on executive leadership support or help recruiting for a corporate board position, please send us a note. One of our executive recruiters will respond accordingly.