Neil Waters explains why greater flexibility and improved long-term planning should feature in the board career objectives of directors in 2015.
I can remember one of my early board assignments many years ago when I sat down with the nominations committee to review a list of potential candidates. I thought it was a good list of people, and that they had many different choices. But the people around the table were uneasy, edgy, and seemed very quick to dispatch most of my candidates to the boundary.
During a conversation about one of the people, I said “well if you think that, maybe we should look at X”. There was instant, palpable relief around the room. Finally I had got it right. I had won the game of “Who Am I?” The “right” person would get the job.
Today thankfully, director selection is a very different experience. My clients are much more disciplined about how they go about the process, and their expectations of us as intermediaries are far greater. The process starts with the nominations committee, or the board, defining the specification.
The five most common elements in that are:
- Extent of board experience.
That makes a lot of sense, particularly considering the current thrust of board skills matrices and so forth. But it misses a very important element – fit.
Fit, in my experience, is everything. Fit allows boards to make better decisions. Fit is not about everyone agreeing. Fit is about creating an environment where every director gets to be their best. Further, fit covers many ills.
Indeed, in my experience, you can compromise on those core five items quite a lot and still yield a much better outcome if you get the fit right. In my mind, the best boards definitely do this; they are always open to the creative solution.
New year wish list
While 2014 has been a good year, there are four developments I would like to see emerge over the next twelve months.
My first wish is that my clients are guided by their skills matrix not enslaved by them. That is quickly followed by my second; that they are prepared to engage me in an authentic discussion about how decisions get made in the boardroom, who performs well today and why, and who is a laggard and why. It will help me to understand fit better.
It has also been a big year for board succession – not an individual director swap, but elevating someone to chair a sub-committee, or indeed to be chair. Which leads me to my final two wishes.
I believe very few directors think about this stage of their professional life as another phase of their career. But if they did, they would realise that they probably need to serve one three-year term as an apprentice, a second three years as someone more experienced, and at that point they can be considered as a suitable candidate for chairing a group of other directors, either in a sub-committee or on a full board.
If you take that view, it tells you that if you do have real ambition as a director, you would need to be involved on boards for at least 10, or probably 15 years. You would want to have started your director career before the age of 60 as it affords your colleagues an opportunity to appoint you as chair with the hope of you doing so for two full terms.
So my third wish is that every director thinks more explicitly about their board career, what they want out of it and the best way to get it.
The other observation is that boards themselves are generally much poorer at this internal “promotion” than they are at director selection. It is very hard for individuals on boards to, at times, express their own desire to be considered, and indeed how they would feel about the relative merits of another candidate for the role.
As advisers, we are finding ourselves more and more drawn into these discussions as a consequence. So my last Christmas wish is for my clients to cultivate a culture of feedback, candour and open conversations to help their members develop as a director.
Still, I do feel the quality of board members walking into boardrooms next year will, on average, be greater than it was 10 years ago.
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