Every year, thousands of sitting and retiring senior executives undertake board seat searches that are overwhelmingly unsuccessful, even though they are highly qualified and capable. Why? The resources available to these individuals are underwhelming;
- The search industry is exclusively designed to serve former and sitting CEOs of large companies;
- Fortune 1000 board seats are rarely available, and outside the Fortune 1000 most board seats aren’t placed through search firms; and
- Advice from large public companies and service providers that cater to them completely misses the mark; most executives’ first board seat is not likely to be a Fortune 1000 company.
Statistically, the likeliest landing spot for you is on the board of directors of a small-cap company (roughly 80% of public companies are classified as small-cap, generally defined as a company with a market capitalization of between $300 million and $2 billion). Successfully securing a small-cap board seat is a function of two critical factors:
- Optimizing and nurturing relationships in a way most of your executives might not have done during their careers, and
- Understanding the nuances of small-cap corporate governance.
Unless you understand how and why small-cap directors are typically appointed, your chances of successfully securing boards seats remain low. It’s the reason why thousands of highly qualified prospective directors never successfully garner board seats.
Optimizing and nurturing relationships along with a pragmatic, in-depth understanding of small-cap corporate governance, are the prerequisites for successful board searches.
I’ve been a senior leadership/board advisor for the past two decades and have become passionate about visionary/forward-thinking governance. As a friend and good colleague, Adam Epstein, and I have often discussed, we can’t think of a board that doesn’t need independent insights, fresh thinking, and a mindset beyond status quo, risk-avoidance governance.
As you can imagine and appreciate, I often get asked “so and so would like to join a board. Any advice?” Unfortunately, there is no secret sauce or short cuts, and it’s fundamentally a relationship-centric process.
Here are eight (8) steps that would be a good start in your personal and professional journey in governance:
1) Accurately understand the dynamics of a day in the life of a board member. There are a lot of misperceptions, misinformation, and misguidance out in the market, so get out on a personal listening tour. Find 10-20-30 board members you like, trust and respect and ask them what it’s really like to serve on their boards. Create an environment where they’d be willing to be candid with you about their relationships with the management team and other board members. Learn about their risk exposures, and what due diligence they did before committing to serve on that board. If they’ve ever resigned from a board seat, find out more about the circumstances, and what advice they could offer in the spring of your governance journey. Also, invest some time and energy to learn about Directors & Officers (D&O) Liability insurance and shareholder activists.
2) Astutely be attuned to the principle motivation for joining a board. Similar to writing a book, know your why! If you’re looking for the fame and fortune, your search may prove futile. If you believe you can fly in once a quarter, spent a day at posh places and collect six-figure board compensations, those days are numbered if not over. With committee obligations, the multitude of challenges and opportunities with every board, and the ever-demanding needs of the management, the organization, and the competitive nature of most industries, it’s a big commitment of time and effort.
3) Recognize the typical trajectory of board service (amazing how many people forget that it’s a privilege/service and not a right or a badge of honor). Begin with a non-profit board, ideally, several where you demonstrate to make a difference (let your results speak for you!). Many small, privately-held/family-owned small business opportunities can come from those relationships. Which often lead to medium- and large, privately held, and eventually up to small- and mid-cap public company opportunities. What I love about small- and medium-private company boards is that the CEO actually wants your help, and they involve more hands-on coaching/mentoring opportunities.
4) Create a one-page board candidate bio. Arm your relationships to intelligently recommend/refer you with an engaging professional headshot, brief relevant bio, unique value-add you can bring to a right-targeted board, specific list of board attributes such as size, industries, challenges and opportunities, concise, relevant past successes you led to solving hard problems or accomplish real outcomes, and of course your contact info. Keep in mind that most people are browser, not readers, and please don’t make the rest of us squint! Less is more. And never forget that any introduction is always a recommendation. So be judicious in your asks of only those who have direct experience with your character and past results.
5) Create a one-page list of 30 board targets. Do your due diligence and create a wish list of boards, and board members you’d like to get to know better, including 10 non-profits, 10 boards within your industry, and 10 small boards where your vital expertise could be of particular interest/value, i.e., deem supply chain, manufacturing or automation expertise. Financial backers of companies (Venture Capital/Private Equity) often find your relevant experience particularly valuable to help create value in their portfolio companies. Keep this list fresh – if a particular board no longer fits, update it with another one. Keep your board bio and target board lists with you and share it with relationships you like, respect, and trust for their input or recommended relationships.
6) Develop/polish your board acumen. Get to know, follow, subscribe to newsletters or podcasts by thought- and practice-leaders like Adam and Dean DeBiase. I’d highly recommend reading cover-to-cover “The Handbook of Board Governance [amazon.com],” (860 pp!) at least once to develop knowledge of language, priorities, committees, processes, etc.). If you’re already involved with a board, I’ve found my membership in the National Association for Corporate Directors (NACD), and the Corporate Board Member by the Chief Executive Group, and other similar organizations useful in the education, national conferences, and local communities they offer.
7) Look for boards where you can be a workhorse and not just a show horse. I once served on a non-profit board with 75 members! The same 15 people attended most board meetings. The difference was where the work got done, vs. who’s mansion the next fundraising event was held! The next board you want to join will contact the boards you have previously served on, and they’ll want to align their perceptions of you with the real impact you are capable of creating.
8) Create a rolling 30-60-90-day strategic relationship plan. Focus on connecting the dots with value-add. Ask, “what relationships do I have where I could add value and in return, they could help, support, or bolster my path to the right board role?” During your listening tour mentioned above, put your bio and list of target boards in front of every executive you believe may be able to help and ask, “I have the bandwidth and am looking to make a difference in the right organization. I’m intrigued by forward-thinking board governance and would like to find the right CEO to support.” Ask them if they know anyone on your target list of boards. But don’t ask for an introduction yet – begin with your due diligence process. Ask insightful questions about where the organization is going and how the management plans to get there. Only when you’ve gained sufficient insights, find three independent, trusted, and credible sources to introduce you to the CEO. Share your perceptions and ask how you could support his/her efforts. Connecting the relationships you have with the ones you need through strategic value-add is one of the essences of the Relationship Economics® methodology.
What’s critical in your board/governance journey is to learn from top mistakes to avoid as repeated by the prevailing market approach to securing board seats.
About David Nour
A thinker, keynote speaker, business advisor and best-selling author, David Nour is internationally recognized as a leading expert on strategic business relationships. The author of 10 books, including best-sellers CO-CREATE (St. Martin’s Press) and Relationship Economics® (WILEY), and the upcoming Curve Benders, he delivers 50 global keynotes annually.
Nour also serves as a trusted advisor and an executive coach and is an adjunct professor at the Goizueta Business School at Emory University. A Forbes Leadership contributor, Nour’s insights have been featured in a variety of prominent publications, including The Wall Street Journal, The New York Times, and Fast Company. He lives in Atlanta, GA, with his family. Learn more at NourGroup.com.