This is the second in a series of posts on effective Board of Directors work (or Board of Trustees, Council, etc.) Some of these posts will be primarily for those new to board work while others will be for those who are trying to improve and professionalize the quality of the work of their organization's board. If you’d like to receive them in your inbox as they are published, sign up at the end of this post.
There are good boards and not-such-good boards. The difference? The people!
As anyone who has been a manager can tell you, the talent levels and dedication of people make all the difference in an organization’s performance. This isn’t to say that other factors don’t contribute to success or failure; financial means, competitive and regulatory environments, quality of products and services and much more come into play. But, talent matters…a lot!
So, first, how many people are needed on a board? In general, I recommend fewer rather than more. In my experience, the ideal size is 7 to 11. Big enough to allow for a variety of backgrounds and perspectives while small enough to be nimble. Of course, in some circumstances (especially with not-for-profit organizations) there are reasons for the board to be larger than this. There might be demographic or representational requirements, for example. Or, one of the board’s primary functions may be as donors and connectors to others who have the financial means to be donors to the school, social service agency or museum. But, for most organizations, a smaller group of talented, dedicated people will get more done.
But, if you are working with a small board, that makes being sure that you have the right people around the table essential to your success. Even one person who doesn’t participate in a helpful way can quickly drag down the entire enterprise.
So, how do you decide what talents are needed? I recommend beginning with a list of all of the people who are currently on your board (both those who are external or often called independent board members and those who are on your executive staff but work closely with the board with voice and vote, or just voice) and list three to five areas of expertise that they each bring to the table. It might look something like this:
Pat: financial, small business, risk management
Sandy: HR/org development
José: sales, marketing, XYZ industry
Gabrielle: higher education, community organization
Clay: strategic planning, financial, XYZ industry
Ali: HR/org development, risk management
This is a well-rounded group on the surface, but depending upon the work your organization is doing, you might need some other skills on your board. For example, you might need fund-raising expertise or expertise about a particular governmental agency or someone who is an attorney. Or, these days, almost every organization needs some type of information technology expertise, whether related to cybersecurity or social media marketing.
So, you might want to put together an expertise grid that looks something like this with whatever areas of expertise are most needed for your organization:
In addition, you’ll want to consider the terms of board members. If, for example, your board members have 4 year terms that can be renewed up to twice, as someone with a particular area(s) of expertise is coming close to the end of a term, you’ll want to determine whether or not he or she will be willing to stay on (and whether you want them to do so….a topic for a future blog post on board evaluation). This might determine whether you need to identify someone new to bring this background to the table.
Beyond skills and expertise, perspective matters. Traditionally, in the USA, boards of directors have been made up of white, middle-aged (or older) men. That is starting to change, but it is still largely the case that white men hold the highest percentage of board seats. And, many of them bring amazing gifts and talents to the boards on which they serve! But, according to the Equilar Gender Diversity Index (GDI) report in March 2019, female representation on for-profit company boards has increased for a fifth straight quarter; they note that percentage of women on Russell 3000 boards increased from 18.0% to 18.5% in Q4 2018. While that shift is good, it pales in comparison to the fact that according to the Bureau of Labor Statistics, in 2017, there were 75 million women aged 16 and over in the labor force, representing nearly 47% of the total labor force. This gap of 18.5% vs 47% is in the face of several research reports from the Credit Suisse Research Institute and other organizations that study the make-up of boards. In 2014, they reported that after surveying 3000 companies around the world, “companies with higher female participation at board level or in top management exhibit higher returns, higher valuations and higher payout ratios.”
Diversity of perspective is about much more than gender. There are even greater gaps when one looks at age, race and ethnicity. Or, perhaps perspective is needed for your organization from people who come from a different geographic perspective. Your organization’s needs for varying perspectives depends upon what type of organization you are leading. Is it a company that primarily sells to African-American women? Then having their voices well-represented in the boardroom would make sense! Does your school primarily teach children of immigrant families? How is their perspective represented in your boardroom? I am not suggesting that demographics be considered more than background, skills and experience, but rather that these should complement one another. I don’t usually recommend quotas. I do recommend thinking broadly about what would be most helpful to strategic, governance and fiduciary decisions for your board.
So where do you find these talented people?
One of the challenges I have seen on boards is that the members all run in the same circles. They might mostly be C-suite executives from mid-sized corporations. Or, they might mostly be church leaders within a particular denomination. Or, they might mostly be medical professionals with a passion for curing a challenging disease. But talented and committed as they might be to the mission of the organization on whose board they serve, if they look alike and hang out together, they aren’t bringing the richness of perspective that can lead to breakthrough decision-making. We know who we know, so how do we break through those barriers?
The answer is network, network, network.
First, write up a clear board member profile. It should include basic information about your organization and the expectations of board members. But it should also be clear about the type(s) of people you hope to find to join the board. Are you looking for expertise in mergers and acquisitions? Say that! Do you hope to find someone who is proficient with social media? Say that! Do you want to diversify your board in terms of race, gender, age, geographic location? Say that!
Then, send that profile out to your networks via email, professional associations, and social media. Don’t ask people if they are interested, but who they know who might fit the profile. And, if you are especially looking to diversify your board, there are many organizations standing ready to assist you. This is not a comprehensive list, but here are a few places to start:
There are many other organizations like this. If you have a Chief Diversity Officer or someone with a similar role in your organization, ask for their help. Or, if you know of an organization that I should include in an updated list of resource organizations for boards and prospective board members, please send that information to me via the Connect Form on my website.
If your organization has the financial means, you may wish to work with an executive recruiting firm to assist you in identifying prospective board members with particular gifts and perspectives.
And, if you are a talented person who would like to be considered for a role on a board, these websites may provide you with networking opportunities, a chance to post your Board Profile, and many professional development choices from articles to webinars to local or national events.
Whether your organization is large or small, for-profit or not-for-profit, identifying top talent to serve on your board is time consuming but worthwhile. When you have a board that is engaged and brings a rich blend of expertise and perspectives to your work, it will make your role whether as board chair or CEO much easier! Besides, it will be fun! It is worth the effort.
My next blog post will focus on recruiting talented people once you’ve identified people who meet the needs you’ve identified for your board.
Beth A. Lewis
© Getting2Transformation 2019