The Future of Boards – High Points for the Next Generation of Directors
by Tracy Houston
These days, prospective public company board members must embrace new perspectives and bold strategies. Whether the issue is financial resilience, corporate strategy and risk, executive compensation, or regulatory compliance – the demands of sitting directors are increasing.
Surveys of sitting directors show that the top concerns of directors are strategy and risk. Boardrooms across the country are faced with a major re-think around strategy and if the company’s risk appetite is appropriate. In addition, there are tensions in the boardroom that cluster around key areas such as: short-term vs. long-term needs; what is patient capital, dispersed ownership vs. concentrated ownership of shareholders and don’t ask, don’t tell vs. increased disclosure demands from shareholders.
To meet these demands, a new set of director candidates is emerging. Experienced business leaders that include division presidents and some private company CEOs, functional leaders in key areas such as IT and HR and creative thinkers that include former government officials, academics and consultants are being recruited to sit on boards.
In 2010, the SEC began requiring companies to disclose how the board views diversity. SEC Commissioner Aguilar explained in a recent speech that a company must explain “whether diversity is a factor in considering candidates for nomination to the board; how diversity is considered in that process; and how the company assesses the effectiveness of its policy for considering diversity.” He suggested that “many corporate boards may need their own Rooney Rule.” The 2003 NFL Rooney Rule has increased the number of minority coaches by requiring at least one minority coach be a part of the interview process.
In this new era, new recruiting protocols are emerging that include longer term succession planning for boards, more detail of director specifications including skills and personal dynamics, more rigorous recruitment process with less of a recruiting potential for ‘overboarded’ directors, and more rigorous re-nomination/evaluation processes.
If you are considering starting down the path of positioning yourself for a public company board seat, be ready to make a commitment as the average placement time for a first-time board seat is 12 – 24 months. A few areas of importance for current recruiting needs are international work, experience in mergers and acquisitions, understanding new levels of risk in the post-recession era, and board or committee leadership experience.
About the Author: Tracy Houston, who as a board advisory consultant, offers a Board Candidate Positioning coaching engagement for executives that would like to develop a strategy to be a director on a public company board. email@example.com or www.linkedin.com/in/tracyehouston