Only about half of board searches for public companies involve the use of headhunters. So, where does the other half find their new directors?
A few go into databases at the Institute of Corporate Directors or Board Prospects—or if they’re specifically looking for a woman, perhaps Catalyst or Women Corporate Directors Foundation. But the preferred approach is to solicit recommendations of the board’s own business networks and those of the company’s top executives—preferably identifying candidates that the individual making the suggestion not only knows but has actually worked with.
As such, those interested in getting on a board might want to reevaluate the importance to contacting search firms or getting into director databases. Instead, time might be better invested in reconnecting with your business network—and reaching out to people with board-level connections who know you, know your work and think highly of both. But before you tap into those precious contacts, it’s critical to understand how boards today actually recruit. Most boards are not just looking for “a good director”; every time they recruit they are generally looking for specific expertise. Here’s what most boards want in their core composition:
Two to three industry veterans. No one can challenge management quite like someone who has held significant executive roles at other companies within their industry and knows the business well. United Airlines is a good example—this board recently recruited ex-Air Canada chief Robert Milton to fill a lack of industry experience for which the United board was heavily criticized by shareholders.
If you’re currently employed, conflicts of interest prevent you from joining the board of a competitor, customer or supplier. You may do better to consider adjacent industry sectors or other industries where you had exposure earlier in your career. If you’re recently retired, however, direct industry experience may be one of your biggest assets.
One to two retired or sitting CEOs. Someone who has “walked in the CEO’s shoes” can both challenge and advise the CEO in a way other board members cannot. Because it can be tough to recruit CEOs, some boards opt for a director who’s run a major business unit. Typically, however, they will only consider a CEO or business unit leader who has run an organization of comparable size and complexity to the company they will govern.
A CFO or retired audit firm partner. This person will chair the audit committee. Boards today seem to have greater appetite for CFOs who bring capital markets experience in addition to audit expertise. Many boards like having at least two directors with strong finance backgrounds, although private equity, investment banking or similar may be the second.
Average board size today is about 10—the CEO and nine independent directors. If we add up the “must haves” outlined above and subtract from nine, only two or three board seats remain for people who bring “other” expertise—IT, M&A, international, government, risk, legal, HR, etc. And every board will make different choices that typically reflect a company’s business and strategic direction. A quick word about diversity: boards today are seeking diverse candidates who also bring the backgrounds/expertise they view as priorities—and frankly, that’s the right starting place.
Now, consider those companies where your background might be viewed as a board priority and Google their boards to see who’s at the board table: do they already have a director with your expertise? If not, where is this company going strategically that might make your expertise a priority at this time? Does the age of any of their directors suggest that some will be retiring soon? If so, might your background serve to replace that of someone who’s leaving? Who’s the chair of the governance committee? Is it someone you know? Someone who one of your business contacts might know? What about other members of the governance committee?
By doing this research, when you finally sit down with your contact, you will have a far more productive conversation. And at that point, consider framing your interest by asking: “Do you have any way of finding out what they’re looking for in their next director?” This is a more innocuous question and sometimes easier to ask for than an introduction or sending over your CV. Yet, it may be pivotal. If you’re a “fit” for this board’s recruitment priorities—and you come highly recommended from someone they respect—you may be pulling up a seat at that board table in no time.
Beverly Behan is a New York-based board consultant who has worked with more than 140 boards of directors in the U.S., Canada and internationally in the past 19 years. E-mail: email@example.com.