Serving on a corporate board is a coveted goal for many accomplished executives. The chance to contribute to another organization, gain insights from peers, and expand one’s professional horizon are common motivations. However, opportunities for board service are limited, and the selection process varies across boards. This guide is intended for both seasoned and first-time candidates to help them prepare for a board opportunity and assess whether there is a mutual fit.
Opportunities are limited
Board turnover is slow, with most boards balancing the need for fresh perspectives against the value of continuity. On average, just over half of S&P 500 boards add one or more directors annually, with new directors making up less than 10% of all directorships each year.
Despite low turnover, board composition has evolved significantly over the years. Today’s boards predominantly consist of independent directors, unconnected to the company or its CEO. As the risks and opportunities facing companies become more complex, boards are broadening their search for directors with diverse skills and backgrounds.
The best boards align their director recruitment with the company’s future strategies and risks, seeking candidates with varied expertise. However, regardless of specialization, boards prefer directors who are “utility players,” capable of contributing to a wide range of boardroom discussions.
Directors with operational or financial experience remain in high demand. Last year, over 70% of independent directors joining S&P 500 boards were current or former CEOs, other top C-suite executives, financial professionals, or division/subsidiary leaders. These profiles are consistently prioritized in board recruitment.
Finding the right fit is crucial
With average director tenure just under eight years on S&P 500 boards, the decision to appoint a new director is strategic and thoughtful. By the time you’re contacted for a board opportunity, your skills and background have likely been vetted and found appealing. Beyond professional qualifications, how well you fit within the board’s culture and your potential to add value are crucial in the selection process.
Assessing boardroom fit is more art than science. While culture and collegiality are hard to quantify, qualities like strong interpersonal skills, the ability to collaborate effectively with other directors and management, understanding the distinction between the roles of directors and management, and contributing meaningfully to discussions about company strategy and other key issues are often evaluated.
Selection processes differ widely, but the best ones consider both value addition and personality fit. Typically, nominating and governance committees lead the process, interviewing multiple candidates for a single board seat. Finalists often meet with the CEO and the independent board leader, and sometimes other independent directors are involved in the interview process.
Thorough preparation is essential
Given the limited availability of board opportunities, making a strong impression throughout the process is vital. Here are some suggestions to help you prepare:
Gain a deep understanding of the company
- Conduct thorough research on the company, including its board, industry, business operations, risks, and opportunities.
- For publicly traded companies, review recent 10-K, 10-Q, and 8-K filings, listen to past quarterly analyst calls, examine press releases, analyst reports, and stock performance, and read news about the company and its industry.
- For private companies, gather as much information as possible from the company’s website and consider signing a non-disclosure agreement for more detailed insights.
Familiarize yourself with the Executive Team, Directors, and Governance Practices
- Understand the backgrounds of the management team and current directors to assess how you might fit and add value.
- Review the company’s corporate governance guidelines, board committee charters, and recent proxy statements for insights into board structure and expectations.
How can you add value
- Boards seek directors who can add value, understand their role, and fit within the boardroom and company culture. Reflect on your research and be prepared to articulate how your experiences and expertise would benefit the board.
- Be ready to discuss specific examples of your value-add and focus on how you can help the company’s long-term strategy, rather than on personal benefits.
- Prepare to answer key questions about your interest in the board, your greatest value, committee fit, understanding of director vs. management roles, potential conflicts, and your commitment to board service.
Assess whether the board is a good fit for you
- The interview process is a two-way street. While boards assess candidates for fit, you should also evaluate whether the opportunity aligns with your goals and values.
- Ask questions about why the board is considering you, where you can add value, the board’s culture, challenges, time commitment, and board-management dynamics to determine if the board is a good fit for you.
Conclusion
By the time you’re interviewing for a board position, the nominating and governance committee likely already understands your qualifications. The interview is their chance to get to know you personally and hear about your career highlights in your own words. Engaging in thoughtful dialogue, asking insightful questions, and demonstrating your potential value are crucial during the interview process. In many ways, the interview serves as a dress rehearsal for how you will contribute in the boardroom.
Board Director Services
The Regent Group offers board director services to the insurance industry. Leveraging our extensive network and deep understanding of the candidate pool, we place exceptional non-executive chairs and directors who bring significant value to the boards they join.