Trends in board appointments

Kelly McGregor MInstD manages the IoD’s suite of board appointment services which includes Director Search and Director Vacancy offerings as well as additional recruitment support. She regularly advises clients in regards to their search and selection of new board members providing independence and guidance throughout the selection process. McGregor has been providing these services to IoD members for more than a decade.

What have you seen change in the board appointments area in recent years?

There has been a significant shift in the skills and experience that boards are looking for when searching for new board members.

Ten years ago, we were regularly searching and advertising mainly for the more traditional areas of expertise, such as legal and finance. This has definitely changed. Boards are far more aware of the evolving needs of their organisations and the varied skills and experience they need to optimise and grow their businesses.

I’ve also noticed an openness to considering directors at various stages of their governance careers. Traditionally, most clients would only consider candidates with at least five years’ board experience, often with an organisation of similar size and industry. Now, more often boards are not only open to those with less experience but are actively seeking those emerging directors, recognising the currency and energy they can bring to the board table. 

Diversity and inclusion is now widely, and genuinely, recognised for the ways a more diverse board can add value to an organisation.

Above all, we’re seeing a strong commitment to following good governance practices – through robust, transparent and independent processes. We’ve seen this across all of our governance service offerings, whether it be finding new board members, deciding on levels of director fees or when evaluating board performance.

How are boards assessing their needs?

Boards are not only thinking more about the make-up of their board, they are implementing sound systems and processes in order to get the mix their board needs to achieve its long-term strategic objectives.

They are having more robust discussions around the board table and identifying what skills and experience are needed. They are also using skills matrices to help identify where the gaps are and what to focus on when looking for new board members and/or succession planning.

Regular board evaluations help boards in this regard.

What does a standard board appointment process look like?

I work with a range of organisations including in the SME, listed, not-for-profit and public sectors. All have slightly different approaches and their appointment processes will depend on the situation and their constitution or governing law.

Also, it can depend on the stage or organisation type – whether they are establishing a new board, succession planning for a family owned business, filling a vacancy and/or adding an additional independent member to an existing board.

Generally, the appointment process includes the following stages:

• Reviewing and documenting the skills and experience currently on the board, through a skills matrix.
• Identifying gaps and what skills and experience are needed for the board to perform well, in line with the strategic plan.
• Agreeing on and finalising key criteria before searching for new board members.
• Conducting advertising and/or search based on key criteria identified.
• Shortlisting for interviews.
• Interviews and due diligence –from both organisation and candidate.
• Offer of appointment.
• Induction.

There has been a noticeable change over recent years. Many organisations are investing more in the first three stages – taking time to evaluate and review their boards’ current make up and future needs.

Organisations often engage with specialists in this area to help guide a board though the process. This can provide board members with confidence and a degree of rigour and independence around a process that traditionally relied more heavily on a board’s existing networks and connections.

How do you think COVID-19 will affect board appointments?

I think it may accelerate some of the changes we have seen to date.

For example, interviews are already often held online and this will become more common while the world faces travel restrictions and other disruptions.

As we become more comfortable with this format, we also get better at it. It can be the simple things like having the camera at the right angle and treating the interview like we’re all in the same room (rather than checking your phone half way through, out of camera shot).

But, in reality, virtual interviews are not quite the same as face-to-face meetings in the same room where conversations flow more freely. Both organisations and candidates will need to be even more thorough with due diligence, extensive reference checking and asking more questions about communication and boardroom style, which is sometimes harder to get a feel for via your laptop screen.

Kiwis will adapt, we always do. We find ways to make the best of situations and I’m sure board appointments will be no exception.

This article is featured in Boardroom April May 2020 issue