Making room and integrating them pose challenges
Boards face a multitude of challenges—from global economic forces to new competitors to increased stakeholder input—and are transforming their membership in response. Beyond our day-to-day work with boards and CEOs, we at Korn Ferry are interested in how board leaders perceive and are acting on the need to modernize by adding a broader range of backgrounds and experience to the team.
For some answers, we undertook a survey, completed this past June, of heads of nominating committees and board chairs of Fortune 500 companies.
Within the context of what they perceive as global changes and transformation in their industries, respondents clearly see the need to add directors with new skills and experience. Specifically, there is demand—as there has been for some time—for financial skills and experience (sought after by 60 percent of board leaders surveyed), followed by global and cyber security (44 percent each), regulatory (38 percent), marketing (36 percent), and others in diminishing numbers.
While respondents seek specific skills, they do not want the downtime of new directors getting up to speed before they can contribute, with 96 percent agreeing with the statement, “We want directors who can quickly add value, not just serve as token additions.”
But gaining the value of new directors, particularly those who have never served on a board before, is a hurdle some boards apparently need to clear. Of those surveyed, 86 percent agree: “We recognize that directors who are serving on boards for the first time need additional support integrating into the board.”
Moreover, nearly half of respondents agree their board “needs to work on accepting new directors so we reap the benefits of diversity on the board.” And more than a fifth went a step further, agreeing that “we need to make the culture change required for new directors to participate in board discussions."
Based on Korn Ferry’s experience recruiting for a broad range of diversity on boards—ethnicity, gender, age, geography, skills—we offer the following suggestions to boards to better the odds of finding directors who both fit the bill and will be poised for success, especially if they have never before served on a board.
1. Widen the net. When seeking nontraditional board candidates, don’t restrict your search to the “usual suspects” in the usual places. Nontraditional directors likely reside below the CEO level, in other functions or leading smaller organizations.
2. Provide onboarding. New directors, particularly those who are first-time directors, may need guidance to get up to speed quickly and contribute. Consider approaches both formal (established programs) and informal (mentoring from an established director).
3. Prepare the board. Consider cultural “coaching” to help board members understand why diversity is essential and to assure they embrace the change.
4. Assess board meeting protocol. Ensure that your board meetings welcome all views and encourage everyone to participate.
Adding new directors to the board, whether veterans or first-timers, should ideally be viewed in the context of ongoing board succession planning, rather than one-off recruitments. Board succession planning is a first cousin to CEO succession and, like its near relative, it is linked closely to strategic objectives. Critical to success is determining the skills and experience that will be required for success in the future.