Does your board have "curb appeal"?

Chairmen always ask me for my recommendations for potential candidates for their board vacancies. Inevitably they’re after the best – a person with the skills that meet the organisation’s needs, who may already have board experience and has overall "fit" with the other directors.

But never has a chairman asked me "is the board is ready for a director of calibre to join us?".

To use American real-estate parlance, I’m never asked if I think the board has “curb appeal”? To continue the metaphor, and much like the first impression made at an open house, I’m never asked whether I think the board looks good on the inside, too.

There’s a popular saying in governance circles that the most difficult thing to do on a board is to “get rid of” a “bad” director – someone who is no longer making a contribution at board meetings, is being difficult, or who doesn’t always attend meetings, and when they do, it’s clear they haven’t prepared.

But no-one ever asks what it’s like for a newly-appointed director who suddenly realises the board they agreed to join doesn't resemble the board they're now a member of.

A professional director will always do proper due diligence before accepting a board seat. The investigation includes reviewing past board papers and agenda, meeting with the chairman and some, if not all, of the directors, as well as the CEO and maybe senior members of management. This process can take months, as the board and the candidate size one another up.

Once the appointment is formalised, the director will attend the first of many years of board meetings and sub-committee meetings, (in Australia it’s common for non-executive directors to serve three terms of three years).

But what if at that first meeting the new appointee wonders what kind of board they’ve joined? It’s a bit like the couple who transition from dating to living together. Each has to adjust to the unromantic conversations about housework and supermarket shopping that they didn’t bother with in the first flush of romance.

A new director and the board have likewise been on their best behaviour and while both parties can get a reasonable impression of what each person is like, it’s not until the first, second and third board meeting that the new director is exposed to the unique group dynamic and the communication styles of that particular board.

A new director has fresh eyes and ears and he or she sees and hears differently to people who have been on a board for longer time.  Obvious problems include whether the agenda is followed as expected, if the chairman runs the meeting well or badly, if some directors dominate the conversation, if the board papers are sent to directors in a timely manner.

Then there are the impressions that are difficult for the incumbents to acknowledge because they’ve been living with them for so long – those pesky personality traits and behaviours of the other directors that the board accommodates for no apparent reason other than tradition. Meanwhile the new director must deal with their frustration in silence, hoping things will change.

It’s often said, too, that the new director is the person who asks “why do we do it this way”? Most directors think this question is typical of the naïve newbie who will learn the board’s ways in due course.

Another way is to consider such a question as a moment of reflection – how do the board members relate to one another, and what, if anything, does the board “put up with” because it’s easier than addressing it in an otherwise busy calendar?

A typical example is the board papers. In my experience of running workshops for CEOs and their senior executive teams on how to communicate better with their boards - http://boardroomcg.com/page/consulting_services.html - the board pack is often a festering sore.

Boards “put up with” badly-composed, poorly-argued and over-written board papers that come with thick appendices; there might be requests for change made to the CEO but these are not always addressed in the way the board wants. The managers of the business don’t see such things as a priority (or as a KPI) in an otherwise busy schedule. Likewise the board hasn’t given a clear enough directive other than “make the papers shorter” or “the board pack is too big”.

But the new director is more likely to say something, and this is a perfect time for the board to revisit the content and style of the board papers and to ask, more broadly, what standard of communication it wants from management.

A new director is new for only a short time. It’s a wise chairman who takes advantage of this fresh perspective and asks for first impressions, without fear or favour. In fact, it would be better if the chairman alerted the new director before their first board meeting that in a few months’ time, he or she would appreciate their observations on the way the board operates.

The last thing a professional director needs is to feel they’ve made the wrong choice in joining the board; the last thing a board wants is to make the wrong choice in filling a vacancy.

Just as in the real estate game where rented designer furniture can turn an average house into a “lifestyle choice” so, too, do boards need to be sure their own house is in order before an advertising and sales period.

Top 10 Ways to Lead a Board with a Solo Female Director

Being the only woman in a well-established group of male directors can be tough, especially when the woman is also the first woman to join the board.

Here are some ideas for Chairman, CEOs and non-executive directors (male and female) to remember when the board is transitioning to a broader composition, appointing directors who represent various dimensions of diversity, and not just gender.

1. Be sure that a woman's comments are heard; if the conversation goes on as though the woman has not spoken, reinforce what she has said, and give her credit for it.

2. If you notice a women being ignored or slighted, let her know you see what is happening and then make it clear to others that this unacceptable behaviour.

3. Be aware of informal occasions (sporting events are a typical example) when women directors are not present and board business is discussed.

4. Find time and ways to get to know the women informally to the same extent that you get to know the other men.

5. Don't expect women to raise gender and diversity issues by themselves; be alert to those issues and take the initiative to raise them also.

6. Don't get suspicious that women are conspiring when women are seen talking together or sitting in groups.

7. Put women directors on the nominating committee.

8. Ask women, (and not only those on the nominating committee), to suggest women board candidates.

9. Remind the board that having one, or two women, isn't enough. Nor is having no-one else who represents of other dimensions of diversity, (age, cultural background, nationality, religion, sexuality).

10. Insist that executive search firms and nominating committees provide a shortlist of board candidates who represent multiple dimensions of diversity, and not only gender.

(Adapted from "Critical Mass: The Impact of Three or More Women on Corporate Boards", Alison Konrad, Vicki Kramer and Sumru Erkut, in Organisational Dynamics, Vol 37, No 2, pp145-164, 2008).

"A woman with Asian-experience" and other stereotypes of board diversity

As the debate continues about increasing the diversity of composition on boards, the Norwegian experience of introducing quotas to redress the gender balance of its boards is widely cited as a key example.

Norway was the first country to introduce a quota for increasing the number of women on company boards. The legislation, introduced in 2003, required that at least 40% of both genders be represented. Non-compliant companies were faced with sanctions including forced dissolution.

It is critical to note that Norway didn’t legislate for “the boards of all listed companies to be at least 40 percent female” as is widely quoted in global media.

Instead, it introduced laws to ensure that corporate boards be composed of 40% of the under-represented gender.

The distinction is critical for the debate on gender balance in the boardroom as it removes the focus on feminism and “women’s issues” and instead forces the argument to be about equality in leadership in business and in the boardroom.

The legislation, which was introduced 10 years after the first motion for its introduction was made, was passed in 2003 by a majority of the Norwegian Parliament. It amended ss6-11a of the Norwegian Companies Act to state that both genders should be represented on boards of public limited companies, state and municipality owned companies and co-operative companies (a business organisation owned and operated by a group of individuals for their mutual benefit).

In the boards of publicly-listed companies, both genders should be represented as follows: 

1.       Where there are two or three board members, both genders should be represented;

2.       Where there are four or five board members, both genders should be represented with at least two members each;

3.       Where there are six to eight board members, both genders should be represented with at least members each;

4.       Where there are nine or more members of the board, each gender should be represented with at least 40 per cent each.[i]

The balancing of gender composition on Norwegian boards was initially slow but by 2005 momentum was evident. The proportion of women in 2002 was six per cent, rising to nine per cent in 2004 and 12 per cent in 2005. Then real progress was made with 18 per cent of board seats occupied by women in 2006, 25 per cent in 2007, 36 per cent in 2008 and 40 per cent in 2009[ii].

The Norwegian experience has caused other European countries, such as Holland, Spain and Iceland, to also introduce legislation to achieve gender balance on boards.

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[i] Storkvik, A., and Teigen, M., (2010) “Women on Board: The Norwegian Experience”, Friedrich Ebert Stiftung, International Policy Analysis.

[ii] Teigen, M., (2008) Norwegian quota policies, paper presented at the Nineteeth Meeting of the Helsinki group on Women and Science, 4-5 November, ISF paper, 2008:12

How to Win a Board Seat

Every year, approximately one-third of the 1,750 seats available on ASX200 company boards are made vacant. Most vacancies occur because the directors have completed their terms; three terms of three years is the usual benchmark.

Other vacancies arise when board members retire because they've accepted a new board appointment which is in conflict with some of the boards in their current portfolio. For example, a director would not be able to maintain a seat at a regional bank board if they then accept a directorship at a bigger bank.

Or the vacancy may occur because a director simply has too many boards to manage efficiently and properly.

Past practice has meant that the candidates who fill these vacancies will be similar to their predecessors - male, Anglo-Celtic origin, and similar professional, educational and personal backgrounds. However, more of these seats are going to women as a result of new best practice guidelines which encourage listed boards to reflect a better gender balance in their composition.

That said, there are still only about 550 positions on ASX 200 boards that are made available every year. And each one is hotly contested.

Winning a seat on an ASX200 company board reminds me of the school leaver or newly-minted university graduate who misses out on a job because they don't have any work experience. How can they get work experience when no-one will give them a job, they lament.

It's the same in board circles. The way to get a seat on a listed company board is to have a listed company board in your portfolio already.

In my previous post, "Waiting for the Phone to Ring....", I advise senior executives making the transition from a full-time career to building a new role as a professional company director to be patient, tenacious and diligent.

The traditional routes are to register with organisations that advertise board vacancies. One example is Women on Boards, a not-for-profit organisation which campaigns for gender diversity on boards across all sectors.

It's also useful to meet the key consultants in the board search industry. Most large consulting firms provide such a service; there are also a range of boutique agencies which specialise in board placement. But be careful to choose consultants who are truly experienced in board search to ensure your résumé is handled professionally.

The best way, however, is to use your personal network. If it's appropriate, let it be known that you will be pursuing a board career once you leave your current executive role. Your first board is the most critical when you're starting out as a company director because it signals to the market what type of director you will be and the type of industry you're interested in - financial services, health, mining?

The people in your personal network who will provide the best advice are non-executive directors, CEOs, chairmen, company secretaries and board search consultants. Telling your network that you're available for a board seat once you leave your current job is critical to finding your first board role. These are the people who already familiar with your experience and capabilities and are more likely to champion your next career move.

It's tempting to defer searching for board roles until after you leave your current executive role because your job is too demanding and leaves you too little time to network. But many executives in transition forget the caché that their job title and company often carries - and how quickly this is forgotten once they've left.

It's often more palatable for a chairman to appoint a new director who is the CEO or CFO of a major organisation rather than to hire someone who's been "retired" for six or 12 months as they "build their board portfolio". 

Making yourself out to be a good catch is part of the game in board circles, just as it is with applying for any new role.

The next steps to consider are:

1. writing a director's résumé;
2. preparing for an interview, and;
3. conducting due diligence on your prospective board's company.

I will cover these in subsequent posts.

Waiting for the phone to ring........

CEOs and other c-suite executives who announce their departure from their companies “to pursue a board portfolio” often believe that they will be overwhelmed with invitations to join boards. For most, it comes as quite a shock that offers aren’t made with the volume and speed that they expected or from the type organisations they believe to be an appropriate match to their skills and experience.

A senior company executive’s life is busy and demanding. In order for the executive to be efficient and productive, an executive assistant (EA) manages the diary, books flights, makes restaurant reservations and ensures a car and driver is ready. The phone never stops ringing; people are always waiting to be seen.

The EA is a lifeline, a diary at the end of the phone. I've seen CEOs and other well known executives walking down Collins Street in Melbourne or George Street in Sydney on the phone to their EA asking: "Where do I have to be next?"

Outside this environment, the former CEOs often find they are fending for themselves. Some lease an office and employ a part-time assistant; others share office space and secretarial support with like-minded people. “Of course, I look after myself these days,” is the clarion call of a former executive in transition to life as a company director.

For the most part, the executive must adjust to a new life of being self-sufficient: booking their own flights, catching taxis, typing their own emails, making follow up calls. Some former executives even confide to me that they’re worried they’ll have to return their membership card to the Qantas Chairman’s Lounge.

As Helen Coonan, a former senator and now non-executive director of casino operator Crown Limited, told The Weekend Australian newspaper: "Things like (having to drive) yourself everywhere. It's a big shock."

But the least understood challenge for most former executives - or former politicians - who are “building a board portfolio” is the wait: the wait for the invitations; the wait for calls to be returned; the wait between appointments. “You have to be patient and resilient because it never happens as quickly as you expected or wanted,” one ASX 200 director told me.

The yardstick is a minimum of two years – of networking and endless coffee meetings in hotel cafes, of waiting for invitations, of being interviewed by board nominations committees, of learning to cope with not being chosen and of dealing with the disappointment and frustration that can follow.

No longer the centre of attention the former executive can find himself outside of the sphere of influence, increasingly isolated and seemingly marginalised.

Making the transition from an executive career to a company director is a tough adjustment to make. My next post on this topic will offer suggestions and ideas for how a serving CEO can start planning for post-executive board career, and how those “directors-in-waiting” can make the transition easier.