The title of this column echoes a question many nominating and governance committee chairs will be asking if the Ontario Securities Commission implements its new proposals on gender diversity.
But many will find those answers only if they break away from current recruitment strategies most North American boards have been following to date, strategies which are artificially limiting their boardroom talent pipeline. This is particularly true for finding new female directors, but arguably impacts men, as well. Over the past five years, 70% of all new board recruits to the TSX 100 and the Fortune 500 were already serving on another public company board, according to recruitment consultants Spencer Stuart.
This data goes a long way to explain why the proportion of women directors has remained stagnant for years: nearly three-quarters of all new board members are being drawn from a pool that consists of only less than 20% women to begin with. It also explains why TSX 100 and Fortune 500 nominating/governance committee chairs routinely complain that all the women they approach to join their boards are already sitting on three or four other boards. Clearly, they’re not looking in the right places.
By contrast, boards that have rolled up their sleeves and gone hunting for “first timers” are finding director candidates who meet what most other boards might consider seemingly impossible specs:
• A U.S. retailer defined their “dream board candidate” as an African American director under the age of 50 who understood social networking media. They recognized that the individual who met this description would probably never have served on a board before. Directors brainstormed and produced the names of four candidates, eventually recruiting one: the head of agency business development at Google, an African American in his mid-40s with a Harvard MBA who had previously worked at Bain Capital.
• A mid-cap insurance company told its headhunter “we want a sitting or just-retired CEO—no prior board experience required.” They unearthed more than 10 candidates who not only fit the bill but also expressed interest in joining their board.
• An Israeli consumer goods company tasked their corporate secretary to research CEOs not serving on any other boards. Through this process, they identified and recruited one of the most prestigious CEOs in the country as a new director.
While some believe that sitting CEOs, CFOs and other top executives are “impossible to find” for board service, this is clearly not the case. In fact, many companies recognize the professional development aspect and encourage it. However, most of those companies also typically limit their corporate officers to only one outside directorship while actively employed. For this reason, such candidates will often have no prior board experience. If they join your board, it may be their first.
That means finding great new female directors is only half the battle. Successfully integrating any new director with no prior board experience is equally important—and may require an expanded orientation. Here are some considerations on that front:
• First-timers in the boardroom can benefit from a “buddy system” where they’re partnered with an incumbent director for their first year. This enables the newbie to both ask and receive feedback from their “buddy” about targeting questions and comments at a governance level. They can also get valuable insights about company history and board politics.
• Recruiting an active executive as a director often means going outside your industry so as to avoid conflicts of interest. For those new to any industry, walking around a plant or project site gives a better feel for the business than months of PowerPoint in a boardroom. If the company has significant global operations, consider sending the new director on a site visit in Canada followed by a visit to an international site a few months later.
• A two-part director orientation—with the second round scheduled after the new director has attended a few board meetings—is quickly becoming a best practice. A new director’s questions are often very different after a few board meetings and this pro- vides a vehicle to drill down on those areas of greatest interest.
Broadening the net to seek out first-timers doesn’t just apply to female director recruitment. With overall diversity a priority, boards can find some great new male directors this way, also.
Beverly Behan is a New York-based board consultant who has worked with more than 100 boards of directors in the U.S., Canada and internationally in the past 17 years. E-mail: email@example.com.