Do you think the average board can afford to pay a search firm $80,000 to recruit a director? Of course not.
One major shift in 2011 was the impact of technology and diversification of boards on creating recruitment opportunities for new and often first-time directors.
Here are the opportunities and advice for becoming a member of a board of directors in 2012, based on recommendations I have given to directors, executives and boards.
1. Network, network, network—and now “connect”
LinkedIn, online databases and other social media tools (e.g., groups) are now at least as—if not more—important as paper resumes, rolodexes, email, business cards and reference letters once were. Most prospective directors are 2-3 degrees of separation between themselves and the ideal board or decision-maker. Social media has enabled the playing field to become much more equal and accessible in linking supply (boards) and demand (directors), particularly for younger and diverse directors. Boards and directors would both be well served to use this new medium. It is efficient, effective and inexpensive.
Second, if you are aspiring to be a director, you should become known to advisory firms (law, accounting, consulting) as often they are asked to serve but can’t because they’re conflicted or it’s a liability issue; however they can recommend you and look good. Advisors however are beholden to their clients, not the director. The person who best represents a director is the director.
Third, you should also be known by shareholders, who in 2012 or 2013 may be nominating directors directly. See this new database for example.
But ultimately it is you who best represents your interests. The networking rests with you, not an intermediary.
2. Target and tailor your search
Volunteer, advisory, charitable, hospital, university, college and government (‘crowns’ as they are called in Canada) corporations all have boards. There are hundreds if not thousands of boards, including in your local community, and they all need directors on an ongoing basis. Many have (or should have) online application platforms. See Ontario for example, or federal government boards. Registration is (or should be) free. Director associations also have online registries for members. See here and here. These are excellent as well.
Target your contacts—the top 25-50 best list say—who really know you and can vouch for you, to people they can recommend. Often it’s the 2nd or 3rd degree of separation that counts.
Read papers and online as more and more board positions will be advertised (the UK may actually require this in 2012), but again it is who you know and your networks that really matter.
Target boards with term limits, high turnover and diversity. Approach them directly, including being introduced to directors or the chair of the nominating committee on LinkedIn or otherwise, via your connections. You don’t need an intermediary to make contact with the right board or director.
Be patient, tactful but deliberate too, in promoting yourself and expressing that you are available, have the time and would be a good director.
Also, don’t listen to people who tell you that you need to wait to be ‘asked’ to serve. This is a veiled attempt to suppress you. Position yourself to be in the right place at the right time (luck equals preparation meeting opportunity).
2. Manage your resume and profile
Your resume (or even LinkedIn profile) will get you the interview. Your interview will get you the position.
Most cv’s I review for directors can be improved. They are for hierarchical and command-and-control organizations and managerial positions, not a board of directors, which is a group of peers.
Good boards now have competency matrixes (I recommended this and we are one of the few countries with this requirement explicitly). The NACD has also endorsed the idea of a skills matrix. Boards want to see core competencies you bring to the table and how your background and experience support these competencies. Prospective directors need to connect their portfolios seriatim to the competencies and other attributes looked to, for and by directors. The four most important are leadership, financial literacy, industry knowledge and softer skills such as impact, influence, teamwork, integrity, communication style, and a bias to learn. And leadership is by no means synonymous with ‘CEO,’ but includes NFP, SME, professional, project and issue leadership as well. Bring your top competencies up front, and have no more than six to eight.
Also, leverage your contacts, languages and international experience, particularly in emerging markets or where the company and management team wants to be (in particular China and India). Don’t rule out serving on boards outside of Canada who seek trade or do business with Canada.
Attend conferences, speak, sit on panels and manage your profile so you become known in the industry or sector you are targeting.
3. Get educated on governance and serve for the right reasons
If you have been out of school for 20 years, get some governance education. The world has changed, and this field is turning over constantly since 2002. The Institute for Corporate Directors, Directors College, and the National Association for Corporate Directors offer excellent programs. There are excellent programs at Stanford, Harvard, Kellogg and The Directors’ Consortium. Spend the time and money to become current, and be seen to be. Also, join a LinkedIn group, such as Boards & Advisors. (It’s free!)
Don’t worry about money when serving on boards. Most directors serve to contribute, network, make a difference, have fun, stay young, and learn. The experience you gain can be leveraged into larger paying boards later.
4. Prepare for the interview
Your interview and references will get you the board position.
Take the interview very seriously. Every word coming out of your mouth matters and will be scrutinized. You will probably be interviewed by two or more directors or the nominating committee. Prepare a binder with highlights and stickies. Bring it to the lunch or meeting. Know the business; know the company and management team; know the accounting and measurement issues for the policies and estimates; know the competitors; and know the top strategic issues. Show you will hit the ground running and add value. If the board is important to you, take at least a full week to prepare. It will make a difference and will be noticed.
Have references and sponsors who can absolutely go to bat for you. These references should have known you for 10-20 years and don’t need to be high-profile. Their direct first-hand knowledge is more important.
5. Negotiate effectively at all stages
Being asked onto a board is a bit of a dance. Create a demand and don’t look desperate: position yourself as a valuable commodity who can contribute. There are certain questions you should ask however to determine the right fit. See my earlier article here.
6. If you have been on the board over nine years, it’s probably time to go
Now it’s time to address current directors. It is very hard for shareholders to ‘fire’ directors at present, but this too will likely change in the next few years.
At present, what is holding back board turnover and renewal are directors who place personal interests ahead of those of the organization. This is an integrity issue. No director is irreplaceable. If a director has been on the board over nine years, regulatory best practice is that that director is no longer regarded as independent. Such directors need to do the right thing and step down to make way for succession and renewal.
This means chairs have to have tough ‘let’s have a chat’ discussions with these directors and lead by example. If the chair is the problem him or herself (more than five years, let’s say), then a group of directors or the chair of the nominating committee should ‘have a chat’ with the chair. Lifetime appointments and directors serving 10-25 years are blocking renewal of new directors. Succession planning and term limits should be explicit to avoid directors who stay on way past their best before date and create discomfort for colleagues and prospective directors. This is not a discriminatory issue but is a matter of renewal and good succession—the same as the board requires for management. Boards must lead by example. Management knows when a board is dated and is less useful to them.
7. Choose your first board and industry wisely and invest the time
Your work on your first board will determine your second, third board and so on—like your degree after college gets your first job, and your performance then on after is what matters.
The first few boards are the hardest, take the most time, but mean the most.
Count on spending 200-300 hours all in, per board, especially if you are not from the sector. This figure may be across all boards, from public companies to not-for-profits. The risks, obligations and liability may be no different.
Don’t over-extend or over promise; the directors on your first board will be your referees for your second: so choose wisely.
On your first board, have mature confidence, leadership, judgment and contribute and communicate. Be polished and a team player; but be independent, competent and rigorous.
8. Be mentored and leverage onto other boards
Lastly, find a mentor and get candid data on your performance, right down to tone, words, preparation, style and contribution.
Have a governance trajectory for the next four to ten years. Go from not-for-profits, to health, education and government boards, to private boards, to SME traded, to companies traded widely.
Above all, be positive and patient: the whole field is changing.