Joining Boards: It’s Not Just Who You Know That Matters

HBR Blog Network For many, a corporate directorship is a career capstone. But attaining one is far from easy. No one can say for sure how to get on a corporate board, but many people point to two routes: the first is to break into the "right" network and the second is to seek a progression of board seats that begins with, for example, a seat on a not-for-profit or community board and eventually results in appointment to a corporate board. Both paths are problematic — neither is particularly transparent or relies on objective measures and given that many boards are stubborn bastions of white masculinity, pursuing the "right" network can be fraught, especially for women and other diverse candidates. Indeed, our research reinforces that concern: many boards still rely on their own (mostly white, mostly male) networks to fill seats. There's a different way — one that is more measurable, controllable and offers greater transparency. It starts with a focus on skills. Although many boards continue to select new members from their own networks, our research suggests that more are beginning to implement objective processes to select members based on the skills and attributes that boards need to be effective. Our 2012 survey, in partnership with WomenCorporateDirectors and Heidrick & Struggles, of more than 1,000 corporate directors across the globe, found that only 48% of the boards had a formal process of determining the combination of skills and attributes required for their board and, therefore, for new directors We know this approach can work because we've seen it: We studied a large corporation that was being split into two public companies for which two new boards had to be created. The chairman wanted to create two balanced boards, with the mix of skills, knowledge, and experience each company needed. He appointed a special team to create an objective, transparent method for selecting the directors. After reviewing the roles and responsibilities of each board and the natures of the new businesses, the team derived lists of the skills each board needed. Then it created a model containing the dimensions critical to a high-performing board, from functional and industry expertise to behavioral attributes. This approach led both companies to recruit board members that were diverse in needed strategic skills. Both boards are on to a good start — demonstrating that when a firm builds a board using a rigorous assessment of the qualities it needs to carry out its governance task, rather than personal networks, the board is better equipped to execute its functions. In our survey, we also asked about specific skills. We wanted to know which were the strongest skills represented on boards and which were missing. Directors named industry knowledge, strategy, and financial-audit expertise as their strongest skill sets. And 43% cited technology expertise, HR-talent management, international-global expertise, and succession planning as the skills missing most on their boards. We also looked at results by industry and region. The industry with the greatest skills gap was IT & telecommunications, whose boards are in serious need of international-global expertise and HR-talent management. The region with the greatest board-level skills gap is Asia, where risk management and M&A adeptness are sorely needed. Based on our research and experience with boards, we believe that the future of director selection is becoming increasingly objective and skill-focused process. Networks aren't going away, but aspiring directors may want to approach their search by asking not only, "what skills do I need to get on a board?," but also by looking at what skills boards already possess and what skills boards need. One strategy might be...

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Growing your small business with non-executive directors

A key question for entrepreneurs is when to take on extra help. Here is some cost-saving advice A non-executive director can come in on a part-time basis to help your company grow. Photograph: Bernd Vogel/zefa/Corbis The objective of most businesses is to grow until the founders and any investors reach their desired exit point. That much is obvious. Less simple to define is just how to reach the next level when the resources and skills of the people in the business appear to have reached their natural peak. The initial response is often to go and recruit some more staff, but this isn't always right, as head hunter Gary Chaplin explains. The non-executive director can be a great deal more cost effective even when the title sounds somewhat grand. "I introduce the idea of non-execs before the client does," he says. Non-executive directors are effectively part-time employees, working and advising at director level but not taking an executive position. The cost savings can be dramatic. "If they can get someone charging £750 a day for two days a month that's someone good for £18K a year when they might have thought they'd be paying £80,000," says Chaplin. The cost will of course be dependent on the task involved. Norman Jackson of JFP Strategic Planning explains that people come to his organisation wanting a new finance director, help with marketing or other requirements, but he is often able to spot other things a non-executive director could do for them that can make a huge difference. The changes JFP puts in can be quite evolutionary rather than revolutionary – a series of small tweaks rather than a single "big bang", he explains. At times there isn't even the need for that; to help a company out of its CVA status, he anticipates a lot of hand holding rather than any revolutionary ideas. The question of when to bring in outside help is difficult. JFP certainly believes the sooner the better: people get into bad habits early on, says Jackson, so they need advice early on. The issue is that they don't know they need advice. So what does the incoming non-exec expect? Chris Hook built up and sold a wheat and gluten-free food products business and is now non-exec chairman at two startup companies, as well as a consultant to Warburtons, the breadmakers. "[A non-exec's terms] are very flexible, depending on the needs of the business," he says. "I've been involved with a young startup that required one day a week, through to some more mature businesses needing two days a month." The key is to find the right person. Hook made a conscious effort to make himself known to relevant businesses when he sold up – banks who were backing management buyouts included. He also worked with legal firms doing acquisitions, and used web resources like Directorbank as well. Being credible plus delivering quickly is essential. "They say a director can take a few weeks getting their feet under the table, but the non-exec has to start demonstrating value on day one because the client is paying," says Chaplin. The clock starts ticking and non-execs can expect to be under scrutiny much more swiftly than their staff counterparts. Sometimes recruiting externally is the right thing to do. Audio company Audioboo, which enables people to put out short audio clips through social media as well as its own network, recently went for that option. Founder Mark Rock decided the time was right to look outside the business after a number of years of organic growth: "As the sole company founder, I...

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