Building the Right Board for the Times
The best the stage are capable of responding to all crises, not just the crisis of the moment
by Michael P. Kelly
Assembling the perfect board requires that directors stipulate a periodic aspect at whether their composition is indeed in equilibrium.
The best boards are skilful of responding to all crises, not just the crisis of the moment. Yet the crisis of the element tends to figure prominently when corporations evaluate board needs and recruit new directors. Financial services companies, for example, are currently seeking risk-management professionals for their boards, as they make trial to avoid the fallout from the subprime meltdown. Similarly, in the wake of the Sarbanes-Oxley Act of 2002, corporations have sought to bring more accounting standards and financial expertise into the boardroom.
These trends are not negative ones. Seeking every individual with a strong accounting and financial background to lead the board’s audit committee, for example, is truly in the company’s with most propriety interest. Yet the placement of these expert specialists upon the body boards should not be allowed to create an imbalance in overall conclave composition or to lead boards to focus to an inappropriate degree on short-term priorities. After all, a board’s most important mission in social seasons and bad includes taking an active role in promoting hegemony succession planning and along with it, long-term stability and growth.
What constitutes the right mix on a board of directors? The ideal collection of directors will offer diversity not excepting that in gender and ethnicity, but also in skills and expertise. Moreover, the directors’ skills should mesh with the corporation’s needs and opportunities. For impulse, companies with active operations or sales in India might benefit from the guidance of a director with first-hand experience in that region, whether the person is a unartificial of India or an executive with on-the-ground business experience there.
Today, we accept to learn how potential candidates might operate below compressing or during periods of economic downturn. Can they interact smoothly with the CEO, management, and shareholders? Can they handle activist investors and the rule makers at the Securities and Exchange Commission? More than ever, a director needs to be poised and articulate. The easiest room for passing to assess whether they have the passage skills needed is to review which they’ve been through in the ended—to gauge whether they have meaningful “scars.”
The goal, ultimately, is to identify and entranceway good long head: the ability to understand complex situations and make wise decisions under contrary circumstances. Now, if the candidate is the former CEO of a public company, chances are he or she will face good on wall-paper. But corporations and their inspect partners will distress to learn how potential board members behave. Are they autocratic in the boardroom? Do they build consensus? Was there a crisis for the period of their manner? How did they handle it?
Savvy boards know that the best type of crisis preparation is one with a longer-term orientation: staying the course with the right CEO, when that is appropriate, and planning ahead for effective leadership succession, hopefully with the epicurism of a longer-term perspective.
As an executive recruiter specializing in boardroom searches, I want to present viewed like much information as possible on a candidate so that a company can make the best choice. As I like to say, you really need to “spend season on the playground” to conduct a complete assessment.
From: Building the Right Board for the Times
