The Corporate Board of Today - A Board Search Primer
The Current Business Climate- A Need for Competence and Independence
The Sarbanes-Oxley Act has increased attention being placed on Corporate Governance. One of greatest challenge organizations face today is building a Board of individuals who are both competent as well as considered independent.
With market dynamics more global, complex and faster moving than ever before – a premium is being placed on the board's ability to recognize and respond to rapidly emerging business opportunities and risks.
At a minimum Boards are expected to play a more active role in shaping the future direction of the enterprise by selecting the best CEO to drive shareholder value creation, while protecting the company's excellent name and reputation
Clearly today it is more difficult to build best-in-class boards...
The current corporate regulatory and legal environment has dampened many directors' interest in taking on new board appointments due to increased liability and exposure to criticism.
The overall time commitment to serve on boards is increasing, becoming a significant barrier for many active CEOs and senior executives. As a result, many boards and CEOs are limiting the number of board appointments for their senior executive team members.
In addition, there is a heightened need for nominating and governance committees to partner with an experienced board advisor that has the ability to provide independent counsel on both board and senior executive leadership development issues.
As the Board search process begins, a number of the following considerations should be given:
Board Membership Considerations/Questions
1. How truly independent is the board? Both in terms of how it is viewed internally and externally
2. Is the board truly effective? How effective? What are the strengths and weaknesses of it?
3. Does the board have the right mix of business, industry or specialized knowledge available to it, given the challenges and decisions that lie ahead of it?
4. Which members of the board are most productive? And why is that so?
5. How has/should the board measure performance of the board?
6. How will each member be held accountable and to what extent for decisions made?
7. Are all constituencies fairly represented?
8. Is the board diverse? How does the organization define diversity on the board?
9. How does the board rate relative to appropriate benchmarks?
It is likely that there is no truly “perfect” board however your current board may have real opportunity for improvement and added-value contribution to the well-being of the business.
A well-defined search strategy carried out by a seasoned executive search firm can address many of the considerations listed above as well as provide the additional benefits below.
1. Timely feedback from the marketplace about the Company and its standing
2. Exposure and initiation of new professional relationships during the process
3. Interaction with strategic customers or suppliers as warranted
4. Introduction to people who may be well positioned to serve as counselors or informal advocates
5. An effective Board search can enrich your network of valuable personal and professional relationships
6. Access to a universe of candidates