This article was originally published by Corporate Board Member.

What first-time candidates need to know about the board recruiting process.

Over the last year, corporations have made tremendous efforts to diversify the composition and enhance the capabilities of their boards. As board recruiting strategies evolved to identify diverse and qualified talent, an increasing number of executives were exposed to the board recruiting process for the first time. In fact, 35% of new directors in the S&P 500 and 25% of new directors in the Russell 3,000 were first-time directors.

Board search firms like ours are now often coaching executives through the recruiting process since so many are unaware of the plethora of machinations and nuances involved at each step. There are certain actions that should be taken by the candidate during each step of the board recruiting process, from the moment a prospective candidate is notified of a board’s interest, through the interview process, and when a formal invitation to join a board is extended. We have witnessed many missteps due to unfamiliarity with the process and mistaken assumptions, which can impact a candidate’s credibility.

We’ve compiled our best advice into this roadmap to help first-time candidates navigate the board recruiting process to increase chances of success. If you are an aspiring public company director and have never been recruited to a board, this roadmap is for you.

#1: The Success Profile

Companies in the Fortune 1,000 generally retain a board search firm when they need to add a new director to their board. The reasons for recruiting a new director can vary. There may be an upcoming retirement, an unforeseen departure, the need to add specific experience or expertise, or a need to increase diversity.

In our experience, the board has a clear understanding of what specific skills and experience gaps it needs to address most of the time. However, sometimes the search firm will work closely with the chairperson, CEO, lead director, and chair of the nominating and governance committee to facilitate stakeholder feedback meetings to gather input on the ideal success profile. In many instances, the CHRO and even the General Counsel can play an important role, providing input, guidance, and direction. A board typically puts together a search committee of these key stakeholders.

Once the board search committee has agreed on the ideal skill matrix and professional and personal characteristics of potential candidates, the search firm develops an initial list of potential candidate ideas. The list can be quite extensive. Over the course of several weeks, and sometimes months, the board and the search firm will narrow down and prioritize the top candidates. This initial number can range anywhere from two to fifteen individuals for each open board seat. The search firm will then be authorized to approach those select prioritized candidates regarding the specific board opportunity.

#2: Evaluating Potential Opportunities

When a search firm first reaches out to you about a specific board opportunity, you should be aware that the firm and the board have already conducted an extensive amount of research, due diligence, and third party referencing on your potential candidacy. Unlike the executive search process, the initial outreach is not a learning session about your career highlights and aspirations. Instead, the conversation is intended to provide you with as much context on the opportunity, the company, and the key constituents involved, to determine if you are interested in considering this specific opportunity.

If you are interested in the opportunity, you must first clarify whether you are allowed to sit on an outside company board. It’s critical that you know this information upfront. Unlike executive search, it is not necessary to keep a board opportunity confidential from your company. Oftentimes a company will have a policy on whether employees can serve on boards. A policy will also limit the type of company boards executives can sit on, especially if the board or if members of the board present a conflict of interest (for example, you will be barred from sitting on the board of a competitor and significant supplier). Most policies dictate that sitting executives are only allowed to sit on one board—so remember that if you agree to serve on a board, you may not be able to entertain another board opportunity until you rotate off or retire from your executive role. Many companies also have a process to have a board opportunity approved. We have also encountered situations when a company’s strategy has impeded a candidate’s ability to serve on a board. For example, if the company will be going through a restructuring or a merger, an executive who will play a significant role in the execution of the strategy may not be given approval to sit on an outside board for capacity and optical reasons.

Second, while this may seem premature, you will need to confirm whether the board meeting dates conflict with your company’s board meeting dates or other significant company meetings. While schedule conflicts are easy to determine, board candidates sometimes leave this step towards the end of the process which can lead to unexpected and unsuccessful outcomes. When evaluating any board opportunity, it is critical for you to do this step before moving forward.

If you pass these first two hurdles, you should then ask yourself the following questions:

• Is this the type of board role I would accept if offered?
• What are my motivations for considering this board? (People, products, learning, impact, stature, financial, etc.)
• Can I impact the success of the board and this company?
• Would my CEO/board/company want me to serve on this type of board?
• Do I have the bandwidth (200 hours/year) to be an effective director as well as successfully perform my current executive responsibilities?

If the answer to any of these questions is not in alignment with you pursuing this opportunity, you should let the search firm know within seven days. It is critical to be honest about these questions as early in the process as possible. We have seen candidates who are aware that the answer to one of these questions might pose a problem but continue to move forward with the process anyway. They mistakenly believe that exploring the opportunity will allow them to learn without commitment, enhance their candidacy for other opportunities, and extend their network and relationships. However, boards do not like being turned down during the final stages of the search process for any of the above reasons. Your candidacy likely has an impact on the board’s broader recruiting strategy, or they may have slowed down attempts to attract other candidates to spend time with you. Being disrespectful to the board’s time can have unintended consequences and can affect your personal brand in the marketplace.

If you decide to pursue the board opportunity and you are confident in your answers to the above questions, you should take the necessary time to review your company’s policy on serving on an outside board and perform as much due diligence as possible about the company, the CEO, and the board. This includes:

• Position specification (from the search firm)
• Annual Report, Proxy, and 10-K
• Analyst reports on the company and industry
• Investor presentations
• Bios of board members and the management team
• Perspective from close and trusted relationships that know about the company or industry.

#3: Interviewing with the Board

Once you have agreed to move towards formal interviewing, and generally following an extensive discussion or interview with the search firm, you will be invited to an initial meeting with the designated board search committee lead. At this time, you should have received preliminary approval from your company to consider and potentially join this specific board. After your initial meeting, there will be immediate feedback from the board search committee to the search firm about your potential candidacy and fit.

We are often asked how boards evaluate prospective candidates. While each situation is unique, we have found there are three common themes that are addressed during the first few meetings:

Will you be able to successfully transition from being an executive to a board member? As there are many different types of leadership styles that can be effective as an executive, some can be obstacles when becoming an effective director. No matter your leadership and communication styles, you need to understand and demonstrate during your interview the skills and perspective needed to be an effective director versus an executive. As a board member, you are expected to provide guidance and advice; not to require the details that an operator of the company would need.

Will you be an effective listener? As a director, you will need to listen to the perspectives of your fellow board members and the management team, but also from all your stakeholders. The most effective directors are those who can distill complicated issues into profound brevity and can help unify others to make decisions together. You will need to be willing to learn from the diverse perspectives of others and allow them to change and reshape your thinking. We have helped boards recruit talent for more than 30 years, and we can assure you that the most ineffective directors are those whose default communication approach is to talk instead of listen.

Will you be able to ask good questions? As a director, the ability to ask questions that provide enhanced insights to make better group decisions is the key to having an impact in the boardroom. Questioning is a uniquely powerful tool for unlocking value in corporations as its fosters more-effective interactions, strengthens trust and chemistry, and better aligns the board and management team on the most critical issues. How you approach your conversations with the Board Search Committee will provide them insight on how you would interact as a director. For each open board seat, it is common practice that only 2–3 candidates will be invited to formally interview. Often, the board has a variety of skill and experience needs to be filled, and each potential candidate will bring something different and unique to the table. Future committee membership and board leadership, as well as factors such as ESG needs (Environmental/Social/Governance) and diversity can play a role in the assessment of the candidate’s fit. If you have been asked to interview, you should consider it a huge compliment and a testament to what board members know or have heard about you.

As you progress through the process, you will also meet the chair, CEO, lead director (where applicable), and most likely the rest of the nominating and governance committee. In many cases, it will be appropriate for you to also meet with a specific member of the management team, depending upon the committees on which you are potentially slotted to serve. You should prepare to meet 5–7 different individuals during the process and expect the interview stage to last 2–3 months.

Once the board has decided they would like to potentially invite you to join the board, several key next steps will take place:

• Formal Approval. You will need to let all relevant stakeholders at your current company know about your candidacy, to gain the final approval to accept an invitation to join the board, if offered. This ideally is done before the following steps.
• Candidate Background Check. You will be given an authorization form to sign and return.
• D&O Questionnaire. You will complete the questionnaire provided by the company to fulfill SEC requirements.
• Formal References. You will need to provide a list of references that provide a 360-degree perspective. The search firm will be responsible for leading this process.

#4: Receiving and Accepting an Invitation

Assuming a positive outcome to the steps above, the nominating and governance committee will recommend that you are formally offered a seat on their board. Once the full board votes on that motion, the chair or the chair of the nominating and governance committee will call you to formally confirm your selection and invite you to join the board as well as attend the next board meeting. It is routine for a candidate to immediately accept the offer unless the candidate was obligated by his or her company to reconfirm their approval before formally accepting the offer.

You should then inquire about the timing of the press release and, if not, the publication date for the annual proxy statement. It is critically important that your current company, CEO, and board are comfortable with the timing. Once the announcement of your board appointment becomes public, you should take the time to personally call everyone on the board whom you met and thank them for the help and guidance they provided to you throughout the process.

Corporate boardrooms continue to be reshaped for the new future ahead of them. It is more critical than ever to get the right board members at the right time for a company to optimize its impact on the world around them. Hopefully pulling back the curtains on the mystique of the board search process will help improve the outcomes and experience for boardrooms and candidates alike.

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About Our Board & CEO Services Practice

Our Board and CEO Services team partners with CEOs and boards to understand issues, assess opportunities, and strategically advise to ensure sustainable growth strategies are optimized. We are committed to executing an action plan that addresses sensitive and complex leadership needs and ensures clients are well positioned for the future. RSR offers trusted advisement rooted in years of experience and market knowledge. We excel at optimizing board and CEO effectiveness through transformative thinking about structure and operations. This helps us to engage closely with clients to drive greater accountability and enhanced performance. Our practice group leverages RSR Partners’ renowned experience in corporate governance with the firm’s industry and human capital consulting expertise to create an integrated and seamless approach. The range of services we provide to boards and CEOs include:

Board Services

• CEO Succession Planning
• CEO Search and Selection
• Managing CEO Transitions
• Director Recruiting
• Director Succession Planning
• Board Evaluations and Effectiveness

CEO Services

• C-Suite Search and Talent Pipeline Development
• Building High Performing Teams
• Leadership Assessment and Succession Planning
• Discreet and Thorough Candidate Due Diligence
• CEO Advisory Support
• Helping CEOs Select an Outside Board

This article was originally published by Corporate Board Member.

Boards that are built to last evolve with the changing needs of their companies and leadership teams. Consider these four guideposts.

The third quarter of 2021 was the most active Q3 for global IPOs in 20 years, according to EY. The IPO rebound, popularity of SPACs and continued surge of private equity and venture capital activity has put tremendous pressure on boards to be ready for being a public company. As a result, many lessons and themes have emerged that serve as beacons and sirens for all boards to consider.

Over the course of our 30 years advising boards and CEOs, what clearly stands out is that the boards that are built to last evolve with the changing needs of their companies and leadership teams. In addition, considering the challenges and opportunities presented by ESG and DE&I initiatives, the stakes for boards to appropriately address stakeholders and have a meaningful impact are at a generational precipice. Accordingly, we are sharing our insider’s perspective on the four most important guideposts your company or organization should think about when building or enhancing your board.

#1: Board Architecture

In the real estate industry, there is a saying that, “the taller the building is, the stronger the foundation needs to be.” The same applies to creating boards of what we call “forever businesses.” As with the previous inflection points in corporate governance best practices, the past two years have reshaped the thinking around how to build a board that is strong enough to confront inevitable headwinds. Every board must start or revisit what their ideal board framework is to successfully execute the company’s strategy in today’s environment and in the next 10+ years.

1. Vision, Purpose, Strategy: All boards must approach their governance framework by understanding the journey they will need to take to reach their aspirational future state.

2. Stakeholder Interests Analysis (SIA): A new but now critical component for all owners and boards is to understand the ecosystem of stakeholders who will have influence or direct impact on the organization.

3. Capabilities: Boards should identify the skills and experiences directors needs to possess to help govern the company and advise management through any challenge.

4. Committee Structure: The number, types, and charters needed for each committee to effectively govern should be carefully crafted. Boards are moving past the standard three committees to include separate risk and finance committees as well as climate, digital and cyber which will require new competencies on the board.

5. Board Size: The number of directors, including independent versus management, should be determined in advance of building a board.

6. Governance Guidelines and By-laws: These should be developed early and include annual director versus classified elections and governance best practices.

#2: Board Leadership

Once the board architecture is finalized, the most critical and important decision is determining the leadership structure of the board, the characteristics of each key position, and who will serve in those roles. Especially for companies preparing for an IPO, the chair of the board, lead director and committee chairs will heavily influence the capabilities, effectiveness and culture of the new board.

1. Board Chair: Every organization has a unique journey ahead of them. Whether it is appropriate to have an independent board chair versus a combined chair and CEO is situationally dependent. Often, the capabilities and experience of the CEO must be overlayed against the needs of shareholders and other stakeholder groups. The board chair sets the tone and tenor for almost all significant forthcoming decisions.

2. Lead Director: If the board determines the best board leadership structure for several years is a combined chair and CEO role, it is imperative to clearly define and empower the duties of the lead director to help carry the workload of the chair and CEO as well as serve as an effective counterbalance to the internal power dynamic.

3. Committee Chairs: As most of the heavy lifting is handled by committees, it is critical for those chairs to have previous committee experience, the necessary capacity and the relevant capabilities to serve. ESG, DE&I and other significant compliance and oversight issues are landing on the doorsteps of the committee chairs, and it is their responsibility to help move the board and their fellow directors forward on addressing these issues.

#3: Board Leadership Succession

One of the most important but often overlooked aspects of building a board is Board Succession Planning. Many boards will prioritize and focus their time and attention on adding directors who can address specific capability gaps when the opportunity arises. This is because succession tends to become apparent when a retirement age or term limit is reached. During the last two years, we have seen a material weakness in the preparedness of boards to have actionable solutions available to address unexpected retirements, especially with committee leadership positions. Some boards approach succession planning like CEO succession planning. However, unlike CEO succession planning when a small number of executives are being groomed and developed for the position, more optionality is required for board succession planning given the demonstrably larger number of directors. All boards need to have a short-term and medium-term succession plan and roadmap for all the key leadership positions that is reviewed and confirmed annually.

1. Develop Director Succession Roadmap: An anticipated and emergency plan should be completed annually for each board leadership position. Ideally, the plan should consider how to fill the position if the need arises immediately, in one year, three years, five years, etc. Boards must pay close attention to the skills, experiences, and behaviors they desire in their leaders.

2. Refreshment: Build your roadmap with the intention that committee chairs will rotate every five years.

3. Diverse Board Leadership Equally Important: Similar to the board as a whole, leadership positions on the board must exemplify diversity as well. This will signal the board’s commitment to diversity as well as help enhance board culture.

4. Board Evaluations: The assessments of the individuals’ performance in these leadership positions must be part of the annual board evaluations. Expectations for the positions are rapidly evolving.

#4: Board Recruiting

The board recruiting landscape is currently incredibly active and competitive. There continues to be an urgency to recruit new directors who can add diversity of thought, experience, expertise, age, ethnicity, gender and/or geography. Whether your board is preparing to go public or is a public company board that just needs to address or enhance a specific capability gap, follow these best practices that we have gathered from advising a wide spectrum of clients on board recruiting.

1. Failing to plan is planning to fail. While focusing on addressing your most pressing gaps on the board, only add a director who has succession potential for one of the board leadership positions. If the director does not have that potential, it will present significant issues down the road.

2. Start yesterday. Many boards wait to recruit until it is definitively known that there will be an “open seat.” What we have learned from working with some of the most effective and well-run boards is they develop a candidate pipeline six months before the need is anticipated. In many cases, boards start sowing seeds with high priority candidates 12 – 24 months in advance.

3. Add what you need—not what you lost. When directors retire or leave a board where they played a significant role, the board needs to avoid the temptation to try to replace the voice and perspective that was lost.

4. Prioritize talent over title. Boards who are willing to focus less on a candidate’s title and more on specific expertise have a better chance of identifying candidates who also have the necessary knowledge to have a real impact and improve the effectiveness of the board. Serving on a board requires someone not only with a specific capability but also broad general management experience. Candidates with previous board experience typically will have an impact immediately and beyond their specific area of expertise. Additionally, it is important to recognize that titling structures differ from company to company and industry to industry. A CEO may bring cachet to the board, but many non-CEOs bring further valuable contributions.

The value of a properly functioning board cannot be underestimated. Your board plays a crucial role in the success of your business. With growing shareholder activism and stakeholder pressures, better corporate governance can only be achieved through a successful working relationship between your board and management as well as positive social and cultural board dynamics and interaction. Taking the necessary time and effort to build or enhance your board is time wisely spent.

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About Our Board & CEO Services Practice

Our Board and CEO Services team partners with CEOs and boards to understand issues, assess opportunities, and strategically advise to ensure sustainable growth strategies are optimized. We are committed to executing an action plan that addresses sensitive and complex leadership needs and ensures clients are well positioned for the future. RSR offers trusted advisement rooted in years of experience and market knowledge. We excel at optimizing board and CEO effectiveness through transformative thinking about structure and operations. This helps us to engage closely with clients to drive greater accountability and enhanced performance. Our practice group leverages RSR Partners’ renowned experience in corporate governance with the firm’s industry and human capital consulting expertise to create an integrated and seamless approach. The range of services we provide to boards and CEOs include:

Board Services

• CEO Succession Planning
• CEO Search and Selection
• Managing CEO Transitions
• Director Recruiting
• Director Succession Planning
• Board Evaluations and Effectiveness

CEO Services

• C-Suite Search and Talent Pipeline Development
• Building High Performing Teams
• Leadership Assessment and Succession Planning
• Discreet and Thorough Candidate Due Diligence
• CEO Advisory Support
• Helping CEOs Select an Outside Board

This article was originally published by Savoy Magazine.

How access delivers results

Successfully recruiting diversity to the boardroom requires a customized search strategy that boutique search firms are uniquely positioned to offer. In my decades advising executives on their most important talent needs, I can attest to the enhanced value diversity brings to the boardroom dynamic. Nevertheless, organizations still struggle to get this right – despite best intentions – and the consequences of inadequate results can have long-lasting impacts on a board’s culture and ability to influence and effectuate.

The reality is that high demand for diversity talent requires boards to partner with a search firm that can genuinely represent them in a very crowded market. Understanding a few key decision points can help those responsible for board composition make informed decisions regarding which firm to select.

What constitutes a qualified candidate is inherently debatable, but this should be the first point addressed with a search firm. Traditionally, board candidates are current or retired CEOs, CFOs, GCs, and major business/division leaders on executive leadership teams. This is a safe, proven path. However, not only is it impassable for most candidates given the paucity of openings, but it perpetuates diversity disparities – a well-explored topic.

An alternative approach is to partner with a search firm to build a board succession plan based on an assessment of competencies. This allows boards to anticipate their makeup and cultivate talent to supplant needs while simultaneously solving for diversity. Succession planning requires a deep dive into the board, which means the firm must possess capacity, discipline, and diplomacy. This process fosters a trusted relationship between the board and firm, and boutique firms purposefully limit the number of their engagements to ensure this high level of accountability and client service.

Since pipelining talent alone is rarely sufficient to achieve diversity, search firms that gain a board’s trust to explore untraditional profiles can expediate the process. Executives with the expertise and perspective that can be additive, such as human resources, ESG, information technology or digital experts, commercial, and purchasing/supply chain leaders, are often overlooked as qualified candidates. Rarely will the “usual suspects” bring distinctiveness in these areas. Boards should also leverage the practical knowledge of indirect reports to the CEO, such as SVPs at large-cap companies, especially for mid or small-cap opportunities.

Board capacity, conflicts of interest, and schedules can dramatically reduce a slate. Untapped, qualified diverse candidates are becoming more sought-after. Therefore, the more boards a search firm is committed to at one time, especially when engaged to search for similar profiles, the more each client must analyze where they stand in the firm’s pecking-order. Boutique firms are unlikely to be searching for similar candidate profiles at the same time and can present clients with unrestricted access to a slate.

Finally, how a search firm approaches the candidate and characterizes the personality of the board can greatly impact the candidate’s interest. Without a deep understanding of the board’s intrinsic nature and strategy to enhance its expertise and perspective, missteps happen. Approaching high-impact candidates is a combination of art and science. Recruiters should develop an extensive appreciation of the candidates’ experience, expertise, character, and interests and articulate clearly how the candidate aligns with the profile and impacts the board. Boutique firms that put candidate care high on their value statement and possess the bandwidth and emotional intelligence to cultivate candidates will be more convincing.

In short, the bureaucracy and oversight that can thwart the success of recruiting diversity to a board are often absent in boutique search firms. On a topic this important, hold your search firm to a higher standard.

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Eric Douglas Keene is a Managing Director in the Board & CEO Services practice at RSR Partners and the founder of Keene Advisory Group. He has extensive experience recruiting a diverse range of senior executives to C-Suite level roles and to boards of directors.