We often get questions about board recruitment and what organizations look for in potential for-profit board members. The dynamics of Board recruitment are quite different than those of recruiting full-time senior executives for a corporation. Those dynamics also continue to change in today’s shifting business environment.
Serving on a corporate board of directors can be a lucrative engagement or second career for executives and recent retirees. According to research firm MyLogiQ, the average S&P 500 board of directors costs their companies $3.3m in compensation, with the average per board member pay hitting nearly $325,000 in fiscal year 2020.
Corporate boards are often looking at subject matter expertise when recruiting new members. Examples of highly sought after experiences include:
- Cyber Security
- Financial/Audit
- Diversity, Equity & Inclusion
- Global Market Entry
- Technology
- Digital Transformation
- Leadership Succession Planning
Corporate board positions are often filled by “who do you know” candidates. A client of ours, a respected leader in the insurance industry, regularly gets asked by industry peers for their expertise. They are well-networked and highly visible.
Boards are looking to diversify. According to a New York Times article by Peter Eavis, “Directors who are Black, Asian, Hispanic, Middle Eastern, or from another nonwhite ethnic group now occupy 4500 board seats among companies in the Russell 3000 stock index, 25% more than they did at the end of 2020 and nearly 50% more than at the end of 2019.”
Women of all races have also made gains. They now account for 28% of all directors, up from 24%.
The business world is changing rapidly – Board members are aging. Corporations recognize they need members that are more diverse, active in today’s business environment (vs retired), and bring multifaceted skill sets and experience. Look for these trends to continue into the future.