03 Aug 2020
How to Get on Your First Corporate Board
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This short paper is derived in part from a presentation delivered by Odgers Berndtson partners Mary Francia and Conrad Woody to Leadership Council on Legal Diversity on July 21, 2020.
About Corporate Governance
Types of boards
There are different types of boards—seed/early stage, later stage, private, public, nonprofit, and advisory—and each has different goals, operating procedures, challenges, and expectations for their board members. A startup or early-stage company, for example, typically expects its board members to contribute knowledge—things like how to turn an emergent technology into a business plan, how to scale upwards, or how to court investors. Public boards, meanwhile, expect directors to be stewards of the company’s long-term strategy, advisors to the CEO and executive team, monitors of company performance, and public faces for the company.
When looking for your first board position, it’s important to be familiar with these differences. You also need to decide what kind of board you’re interested in serving on, and what type of board will be best served by your presence on it.
The chief goal of the corporate director is to create and protect value for the shareholders; directors do this by guiding strategy, monitoring the financials of the company, managing human capital (especially leadership), and overseeing risk.
In executing this mandate, board members face three main challenges.
- Information: Boards have to be on guard against “window dressing”—i.e., information that is impartially curated and filtered in ways that veil the actual health of the company and the viability of its strategy. This often means that directors have to go out of their way to be knowledgeable about the company’s performance and fact-check the information they receive. Board members, therefore, need to be able to distinguish between background noise and warning signals.
- Group dynamics: The board is not your typical leadership team and working together is essential, but it’s not always easy.
- Time management: The average corporate director spends 240 hours a year on board work—that’s six forty-hour weeks, excluding travel. And in times of crisis, that six-week-a-year commitment can turn into a full-time role. Far too many new directors underestimate the amount of time they will have to devote to the job, so it’s crucial before you begin looking for a director role, to calculate the feasibility of this commitment honestly.
Boards have three primary duties against which their goal of long-term stewardship and resilience is measured:
- The duty of care (fiduciary and legal responsibility). It sounds like common sense, but directors have a legal obligation to care about their company’s health and to act upon that care. They need to act in good faith, on an informed basis, and honestly believe that the actions they take are in the best interest of the company.
- The duty of loyalty. As is implied above, directors need to be loyal to the company, not to themselves. In other words, directors shouldn’t take advantage of the information available to them because of their role as a board member. Board members can face jail time for offenses such as insider trading.
- The duty of candor. Directors are duty-bound to make full disclosures of pertinent information to other directors, management, and shareholders—regardless of how unpopular or personally inconvenient that information might be.
There are three primary protections for corporate directors.
- Exculpatory provisions, located in some corporations’ charters, provide that in the event of monetary losses or breaches in fiduciary duty, directors are not financially liable to stockholders.
- Indemnification agreements can ensure that directors are not considered personally liable for losses sustained by the company.
- Directors and Officers (D&O) Insurance can indemnify a director if they do suffer financial losses as the result of legal action brought about because of their directorship.
As of April 27, 2020, the average public company director’s salary in the United States was $68,925, but the salary range typically falls between $53,080 and $85,149. Fortune 500 companies are much higher, with an average of $300,000. In Europe, director positions tend to pay less and they tend to be limited to cash retainers, while payment in the United States is generally distributed across multiple areas, including:
- Board cash retainers
- Board meeting fees
- Committee pay
- Board full value stock
- Board stock options
Board diversity trends
Board renewal rates are rising, which means that there are more board seats available to candidates at any one time. Many of these new seats are being filled by candidates whose race, ethnicity, gender, sexual orientation, and nationality lie outside the traditional director profiles, i.e., a white male with finance or CEO experience. The percentage of women board members has risen over the past two decades; Europe is a leader in this regard, with 42% women directors in France. In contrast, only 27% of U.S. directors are women, which indicates that there is still a significant amount of improvement to be made. Ethnic diversity is also on the rise, but it’s growing at a slower pace.
How to Get on Your First Corporate Board
Seven steps for getting board ready
Step one: Know your motivations. By knowing why, you want to join a board, you can better identify what kind of board role you’re best suited and what types of companies and boards that you should consider.
Step two: Identify your proposition. This is harder than it sounds, and it often involves doing some serious self-evaluation. On the positive side, you need to identify both what value you can bring to a board—what specific skills and behavioral traits make you stand out from other prospective board members. But you also need to build a clear picture of the skills, experiences, and knowledge that you don’t yet have—then go about filling in those holes, either by taking classes or changing roles or jobs. Looking for firms that offer leadership development and succession planning programs can be a massive benefit for prospective board members.
Step three: Know where you’re needed. This, too, is harder than it sounds, because director expertise is often relevant outside of the specific industry from which it comes. Finance experts, for example, are highly sought out in non-financial fields—as are technology experts, supply chain experts, and others. Sometimes your expertise may be in high demand in spaces you haven’t considered.
Step four: Write a board CV or bio and tailor it to each board. Just as you might slightly (and truthfully) adjust the emphasis of your resume depending on what board you’re interested in; you need to adapt your CV to highlight the specific skills, experiences, and traits that will be appreciated by specific boards. In addition to your skills, your CV should outline your motivations, the value you expect to bring to a board, and the specific kind of role you expect to play on the board in question.
Step five: Control your image and reputation. In searching for your first board, you’re trying to project a persona. You can influence your online persona by publishing articles, appearing in interviews, and, conversely, by ensuring that you come across as calm, mature, and balanced in all online appearances. This is a career-long project.
Step six: Make your interests known. The best way to get on a board is by networking, so it’s important to tell your acquaintances—especially those who currently sit on boards—that you’re interested in a board position. At the very least, these current directors can offer you guidance or act as references. In the best case scenario, they may be able to introduce you and help bring you onto their board when a vacancy comes up.
Step seven: Network responsibly. When self-marketing, it’s essential to put yourself out there while not seeming pushy. You don’t want to appear self-serving or monomaniacal. Attend events, engage with people, and expand your network—these actions will get you seen over time. That said, you should be selective in your networking; some networks are right for your reputation, others less so.
Know what boards want: competencies
For decades, financial expertise, executive experience, and prior board experience were the most desired skillset traits for prospective boards. Recently, however, responding to a widened array of risks, business complexity, technological disruptions, and social and environmental obligations, companies are bringing a diverse suite of expertise onto their boards, including, among other things, expertise in international politics, sustainability, national security, strategic development, and information technology. This has opened whole new sectors of the workforce to board positions at the highest level.
Currently, the main fields of expertise for boards are:
- Specific industry experience (i.e., expertise in the industry within which the company operates)
- Leadership experience (P&L)
- Strategy development
- Financial acumen (though, as noted, it’s not the gold star qualification it used to be)
- Information technology
- International/global experience
- Government and regulatory (this is especially true for companies who often have to lobby or work across international lines).
- Corporate governance experience or knowledge (this can be gained either by serving on a board or by attending a board preparation program).
Know what boards want: mindsets
The duties of the board differ from that of the executive team in a number of crucial ways—as does the way these entities accomplish their respective tasks. No matter how communicative and team-oriented their style, the executive’s role is to make decisions and see those decisions implemented. By contrast, the role of the board is to work towards decisions via a collaborative process that includes each member of the board. For this reason, board members must possess a certain suite of behavioral / mindset traits to be effective.
- Good directors are balanced judges. Because CEOs average about five years in their positions, but directors generally serve longer, the board gives the company stability of oversight, helping it weather executive transitions and retain continuity of purpose. One aspect of this, and one of the board’s most important jobs, is judging the leadership team’s fitness to steer the company.
- Good directors are skeptics. They are uncomfortable following impulses or gut reactions. They want to see the data and develop a fluent grasp of all the options before they make up their mind.
- Good directors are collaborators. The board as an institution relies on its members to correct each other’s blind spots and those of the executives they oversee—and good directors, directors who value collaboration, thrive in this context.
- Good directors are socially savvy. They are adept at measuring personalities and know how to deliver information to different kinds of people. Like politicians, they need to be able to structure their advice around the emotional and intellectual needs of the people to whom it is addressed.
Writing your board bio
Your board bio is an opportunity to translate “what you’ve done” into “what you’ve learned.” Ultimately, good board members are defined by their wisdom, by which we mean their ability to deploy a wide variety of relevant life experiences for the company’s benefit. Your goal when writing your bio is to make it clear that you’ve got these experiences and that you’re capable of using them judiciously.
Be sure to include explicitly:
- An introduction. This is a sentence or two that describes your current and/or recent experience in a way that also declares why you’re interested in and ready for a board position.
- Your expertise. Be clear about what your primary and secondary knowledge is. If you’re a CIO for a global industrial company, for example, you might emphasize that you’re familiar with using technology to determine and drive strategy, then mention cybersecurity and international business as your secondary expertise.
- Other qualifications. Note whether you’ve got leadership, P&L, or governance experience. Also, note your education history and your work history (the information you’d see on a regular resume).
Tactically, your board bio should demonstrate your qualifications for a board position, and it should do this by presenting a vision of what you can do for each specific reader’s board. For this reason, you should tailor your value proposition to individual board opportunities.
Building your brand
As noted above, a primary difference between recruiting directors vs. recruiting C-suite executives is that directors are recruited not because of what they have done in their careers, but for what they have learned in the process. Building your brand, therefore, requires an act of translation on your part: you need to demonstrate how you can be valuable to a board and then publicize that image so that recruiters can found it.
The process of building your brand is a lifetime commitment—and it has to take place in multiple avenues of your life. In addition to creating a board CV and marketing your interest in a board position within your professional network, you should make yourself known to the communities within which you serve and the causes you support. Being on a nonprofit board in the art world, for example, has multiple benefits to a prospective director: it gives you the kind of governance track record that ensures you appear in the modern technologized search algorithms. At the same time, it expands your network since many directors, and donors in the arts scene work in or sit on the boards of public or private companies.
Publicizing your brand
Because we’re all connected by technology, it’s essential to cultivate your digital brand. If you want to get noticed by a recruiter, you need it to make ridiculously easy for others to learn who you are, what you’ve done, and what you stand for. One way of doing this is to write and publish articles that testify to your thought leadership in a particular space. If you wrote, for example, about social justice, workplace health, or global supply chain issues in recent years, you might find your expertise in high demand right now.
Questions and Answers
Is there a benefit to joining a nonprofit board?
The honest answer is “it depends.” The immediate upside of being on a nonprofit board (aside from the fact that it’s an honor to serve on a nonprofit in whose mission you believe) is that it can provide you with board experience. Public, Private, and nonprofit boards all come with different board functions and fiduciary duties. Still, they, by and large, share the collaborative process that boards use to come to decisions, and this can be an invaluable experience to executives who want to find positions on boards.
Nonprofit boards are also great networking opportunities—and these networking opportunities can lead to other board positions at related nonprofits or even public companies. Sitting on the board of a local community arts organization, for example, may not in and of itself get you a public board appointment. But the contacts you gain at that local organization may help you get a position as a director at a larger nonprofit with a more extensive network of contacts —and ultimately you may find yourself on a board with people who also serve as executives or directors at large public companies—the exact people who are most likely to help you get a public board seat
Lastly, nonprofit board positions help you get seen by recruiters. The same kind of escalating progression (e.g., from a $5 million nonprofit board to $10 million nonprofit board, to $100 million nonprofit board) is what recruiters sometimes call a “pattern of excellence.” Patterns like these demonstrate growth and—regardless of whether they pertain to governance experience, educational achievements, or responsibility progression—are critical indicators for recruiters.
How should lawyers position themselves for a board role?
Legal expertise at both the executive and board levels is primarily concerned with risk mitigation. The difference between a company’s general counsel and the legal expert on their board is generally concerned with different risk timelines: The general counsel is putting out fires in the present tense; the legal expert on the board is looking for smoke on the horizon. Furthermore, general counsels are engaged in various management responsibilities such as compliance, mergers and acquisitions, labor relations, and government and public affairs—their skills can be very valuable to the audit committee and their management of strategy with enterprise risk.
This should inform the way lawyers position themselves as board candidates. As noted previously, one of the board’s most important duties is to oversee the CEO and executive team. Several studies, however, indicate that this role is often overemphasized by underperforming boards, who also tend to underemphasize long-term strategy; the most effective boards, on the other hand, spend far more time thinking about and setting long- term strategy for the company than they do micromanaging the operations of the firm.
Lawyers who want to get on boards should emphasize this fact—and emphasize that any discussion of long-term strategy should be accompanied by a conversation about the long- term legal and compliance risk.
How can prospective board members approach executive recruiters?
There are several things to consider when approaching or working with executive recruiters.
- Identify the recruiters that do board work in your space. A search professional who does board searches in the government services and nonprofit sector may not be especially helpful to someone who’s identified that their primary value-add will be in the industrial sector.
- Rather than seeking out search professionals and asking for their help, try to build the reputation and publicize your brand in such a way that (a) makes it easy for recruiters to find you while they’re working on a search, or (b) makes it clear to recruiters that you are immediately viable as a candidate.
- The best way to form long-term relationships with recruiters—as with anyone—is by helping them as sources of candidates for their prospective searches. This means serving as references when asked and leveraging your network to help them.