Introduction
There are 6 Critical Factors to consider new board members.
This article outlines the first three factors. The next blog post will outline factors four to six which are Evaluation of Board Members, Needs of the Board, and Time Limits.
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Background and Experience
Experience on one type of board may not automatically create excellent candidates for other types of boards. For example, the needs of a not-for-profit board may be quite different from those of a business boa
rd. Therefore, it is essential to thoroughly examine the background and experience of the individuals being considered.
If a person is on the board to raise the board’s status, it is essential to acknowledge that fact. That becomes that person’s contribution. When the board requires a person knowledgeable about public-sector legislation or issues facing members, the board is searching for a person with a different background and/or experience.
According to Dr. Richard Leblanc, the notion that CEOs make better directors is unsupported by empirical evidence, and this can lead to interlocks and reciprocity/favoritism. He says that “CEO” is not a competency but a job title; however, “leadership” or “enterprise leadership” should be unpacked into sub-competencies, as is done by good boards.”
One of the arguments is that there are an insufficient number of individuals to pick from but this is not totally true. As Sheryl Sandberg points out in her book Lean In: Women, Work, and the Will to Lead many indiv
iduals need to be given a chance.
2. Competencies
Do board members really need competencies? Sheryl Sandberg contends that men are chosen because they appear to have pote
ntial while women have to prove themselves first.
There are organizations which are setting standards designed to promote public confidence. The Office of the Superintendent of Financial Institutions Canada (OSFI), the primary regulator and supervisor of federally regulated deposit-taking institutions, is taking the lead globally by requiring boards to have risk and relevant financial industry expertise. It was created to contribute to public confidence in the Canadian financial system and specifies international financial reporting standards which boards can follow. These can be found at http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/guidelines/sound/guidelines/CG_Guideline_e.pdf
Competency is broader than formal education and work experience. Boards should consider innate and informally-learned skill sets, connections, passions, knowledge gained in multiple settings, professional development taken, and desire to contribute to the achievement of the mandate of the specific board.
3. Diversity
Diversity has been discussed for many decades but boardrooms do not necessarily reflect that belief. I
f our boardrooms still look like an ‘an old boys club’ rather than a melting pot of ethnicity, then that board could be missing valuable expertise which would contribute to its success.
It is true there are many hugely successful business men in their mid-40’s to early 60’s but if these are the only ones sitting around the boardroom table then the voices of many will never be heard or considered, no matter how fantastic each of these men might actually be. The job of a non-diversified boardroom is many times more difficult and challenging than that of a diversified one. There is insight and value in the unique and individual opinion of each type of stakeholder and with that insight there is potentially great value.
In Canada, Quebec has taken steps to change boardroom realities. All councils and boards have to take responsibility for ensuring that all voices are heard at the boardroom table and no key stakeholder is marginalized.
One method is to set quotas. This does not necessarily ensure the best people are selected from the intended populations? It is essential to develop leadership capacity in potential board members of varying ages, genders, and cultural backgrounds. This can be done by making board-required competencies known, encouraging individuals to gain these competencies, advising populations of training opportunities, and choosing board members who will need skills training.
