When developing a slate of board members to serve on a board of directors, the business and its chairman of the board need to define the attributes most needed going forward. These attributes are used to formulate a model director profile.
It all begins with a business “needs” assessment in order to help the board source the best board candidates.
Take a closer look at the strategic plan and the business direction. Where is it headed? What are or will be the lines of business? Is the business early-stage, high growth or more mature? Are international markets important? Asking these types of questions helps to identify key attributes you will be seeking in your board of directors.
Additionally, consider including certain functional attributes (i.e., M&A, operations, HR, regulatory, etc.) and industry expertise in the profile. Look for a record of accomplishment in the attributes you value including, when needed, prior board experience. Here your focus should be evaluating if the accomplished candidate can provide candid, insightful advice while refraining from getting overly involved in the business.
Any top performing board of directors must attract the right mix of diversity of thought and idea to create a productive level of tension. It takes a skilled chairman of the board to seek it out and orchestrate this dynamic and when done well, makes the difference between good and great boards. Board of director diversity may be found in people with varying age, cultural heritage, sex and/or professional and educational background. It requires a commitment and level of perseverance to attract and retain board of director diversity.
Lastly, seek independent board members. You don’t want to be the “genius with a thousand helpers” as described in the book Good to Great by Jim Collins. If you are investing the time to build a best-in-class board of directors then seek out talented, independent board members.
An independent board member has not worked for the company in the last three years. Preferably, they have never worked for the company. The independent board member is not a relative of any employee, provides no other services to the company, not employed by any firm providing services to the company and receives no compensation from the company except for board of director fees.
Use the model board of director profile to develop a series of interview questions. Review these with all interviewers to level set the interview team. Also use the model board of director profile to create a simple decision-making matrix with candidates across the x-axis and the attributes you seek running down the y-axis. Assign a numeric value (5 = highly skilled to 1 = not skilled) to each candidate for each attribute then total their score. Each interviewer should use the matrix to score candidates. This simple analytical tool facilitates post-interview discussions and keeps the group on task. The tool is an augmentation not substitution for a holistic process, so by all means incorporate other relevant areas like personal interests, style, respect, etc. in the post-interview review sessions.
Many private companies seeking independent board members for the first time will often times “phone a friend” and use their network to identify possible board of director candidates that fit the model board of director profile. Another approach to consider is the use of an outside search firm. Successful retained search firms will extend your reach and leverage your time. Used appropriately they can reduce selection bias (i.e., follow the model board of director profile without emotion) and work quickly to fill the bill. Another less obvious advantage of using a professional retained search firm is avoiding the potentially difficult task of rejecting people approached but not selected. Granted the use of an outside search firm implies trust as you lose some control, and the fee structure can be expensive.
Mark Richards is the retired Chairman and CEO of Appvion, Inc. headquartered in Appleton, WI.