Targeting outside board seats – what you need to know
Targeting public corporate boards is a popular strategy for senior corporate executives and retiring CEOs planning for their “sunset career.”
If you are serious about landing a board seat, be prepared to invest 10 hours per week, according to Mike Lorelli “… there is no 2nd gear. You either go for it or not.” (Executive Chairman of the Board, Rita’s Franchise company, the United States’ leading Italian Ice and frozen custard chain).
The aging workforce is presenting a welcome talent pool for public companies seeking competent and experienced CEOs which is potentially lucrative for the company but a challenge for candidates vying for a board opportunity because of the extreme competition.
Unless you are prepared.
Role of the board
Generally speaking, boards of directors are responsible for the performance and selection of (1) the right management team, (2) the direction of the company and (3) oversight of the operations of the company.
Based on interviews with current directors, critical components of management supervision are the performance of the CEO, organizational succession planning, capital expenditures, budgets and business planning oversight. Independent analysis and decision-making are important competencies for the outside director.
Public corporate board stats
According to Mr. Lorelli, it is estimated that there are 5000 public companies in the US, with a total of 35,000 outside directors and a reported 7500 private equity companies. In Canada there are 3559 publicly traded companies listed on the TMX Group (Toronto Stock Exchange and Toronto Venture Stock Exchange), according to the World Federation of Exchanges.
The Stuart Spencer report study documented the Average S&P 500 director compensation in 2014 at $249,168 U.S. according to a report by Spencer Stuart Board Index. The average age of the outside director is 63 years with the youngest overall average age at 45 years of age.
It remains highly competitive.
Up for a challenge?
For the corporate executive candidate, targeting an appropriate board opportunity includes gathering data and information that will identify gaps in the current skill sets of the board. Understanding the market, the business strategy and the succession plan of the organization provides a competitive edge—although a great deal of time and effort is required to gain this knowledge.
Recruiters who specialize in board recruiting may provide inroads to board opportunities; however, what applies in the executive job search also applies in the corporate board search: the hidden job market.
Selection criteria attractive to nominating committees and recruiters
The often quoted Irving Olds (Chairman of the Board of United States Steel in the 1940s) was critical of company boards; he described them as being “like parsley on fish – decorative but useless.”
However, board accountability and liability has changed over the decades and boards are becoming more strategic in how they choose their directors.
According to the Spencer Stuart Board Index report, selection criteria for outside directors are focused creating diversity on their boards and are now including specialized knowledge in areas such as social media and information technology.
Here is the full list quoted in the report:
Active CEO/COO 60%
International experience 55%
Industry experience 51%
Finance experience 45%
Retired CEO/COO 40%
Digital or social media expertise 28%
Information technology expertise 27%
Risk expertise 24%
Marketing expertise 20%
Regulatory/government expertise 17%
Formal director education is highly attractive to Nominating Committees as well. Two excellent programs include the Canadian Institute of Corporate Directors and the US American College of Corporate Directors.
Additional factors that will add to your marketability as an outside director include:
- CEOs you’ve coached.
- Referrals by current outside directors in your network.
- Being clear about your unique contributions.
- Understanding the gaps in the current board.
- Your industry experience.
- Management experience.
- International experience
- Growth, including M&A
How to prepare for a public board opportunity using a pull strategy
Visibility is important for career savvy career navigators. In your current role, you likely already do the following things that build your professional equity. However, if this is not a standard practice for you, consider the following activities that can have a long shelf life and contribute to corporate memory:
- Write articles and white papers in your area of expertise and industry
- Attend tradeshows outside your industry
- Attend association events
- Speak at events
- Offer to serve as a guest blogger on relevant sites
Connect with recruiting firms who specialize in board recruiting and follow companies that interest you. Watch trigger events in the media that may impact the business, watch for trends. If the company is public, listen to the quarterly analyst calls where you will listen to the CEO talk ‘real time’ about the company. Of course there are endless sources of information available today, including a university or public library reference librarians.
Don’t keep your interest in board servitude a secret. Expressing your interest on your LinkedIn is a powerful way to be found by board nominating committees and recruiters looking for candidates like you. Use relevant keywords in your LinkedIn Summary, the Skills section and in the relevant company descriptions.
Be clear and bold about your intentions. Here’s a sample for your LinkedIn profile summary that you can customize:
“Interested in connecting with nominating committees seeking an experienced c-level executive with international experience in mergers and acquisitions.”
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