Start selling your company’s values, especially if you want younger directors.
When considering a board appointment, Tanuja Dehne looks for a board that promotes a strong culture and a company where she can have an impact on the business, one that focuses on more than just the bottom line.
“It’s the recognition and awareness that culture matters, your people matter, that other stakeholders matter,” Dehne stresses.
As a corporate attorney and a former chief administrative officer for NRG Energy, Inc., as well as a young woman of color, she knows her value in the boardroom. To attract directors like Dehne — as it is with many of the tech-savvy, engaged directors organizations want and need — board members must drive their companies to promote their values and make clear the impact a new director can have on the business and society at large.
Board positions at public companies are sought after, but finding the most dynamic directors, those with digital and disruption know-how, can be a challenge, especially if a company is looking to bring on younger directors.
Directors say diversity of age is important to achieving diversity of thought, according to PwC’s Board Composition: Consider the value of younger directors on your board. In fact, they rated age diversity as more important than any other element of diversity, including gender and race.
However, only 6% of board seats are occupied by individuals who are under the age of 50. Of the S&P 500, only 43% (217 companies) have a younger director and for 50 of those companies, the younger director is also the CEO.
Many next-generation directors look to a company’s stance on environmental, social and governance (ESG) issues. Boards should put their positions on the topic front and center to woo the best talent.
This is another area that gets Dehne’s attention, the issue of climate change and how boards are addressing the topic.
“What excites me is the growing acknowledgment that the disruption caused by climate change can actually bring about transformative opportunities for companies and their stakeholders to thrive in the long term,” says Dehne, who sits on two public boards and is also a senior adviser for The B Team, a nongovernmental organization focused on mobilizing global leaders to drive a better way of doing business for the wellbeing of people and the planet.
What do you want?
“For a certain candidate pool, partly for this next generation, it is competitive,” says Julie Daum, managing partner for board services at Spencer Stuart, adding that they pick and choose where they want to serve. But, she adds, it cannot just be, “‘We need a new and younger person,’ but why they need this skillset.”
To get the best talent into the boardroom, it’s important for company leaders to know what they want in a director, or even more importantly, what the company needs.
“If you don’t define up front what good looks like, you’re never going to find it,” says Lauren Smith, a managing director for Diversified Search.
A board, she adds, needs to take a close look at who is already around the table and what the company still needs.
However, when looking for the best fit, don’t assume you need to stack the boardroom with CEOs, Smith says. Instead, she says, find people with “strategy experiences, some tech and cybersecurity knowledge, someone who understands the consumer.”
“When you think about building a board,” Smith says, “think about building a sports team. You wouldn’t build a football team with all quarterbacks.”
Making the pitch
Once needs and a detailed role description are created, management and the board need to figure out how to tell the company’s story.
“Design an engagement process that is open-minded about the value of what you want on the board rather than the press release about the board,” advises Jason Baumgarten, a partner in the CEO and board practice at Spencer Stuart.
When the board is ready to invite someone to join, it’s important to be ready with details.
During the preparation, the board’s needs should be outlined, but expectations for the new member should be as well. Don’t leave it up to the candidate; they should know what they’re walking into, an active board or a passive one.
“Laying the groundwork is fundamental,” explains Diversified Search’s Smith. “Just showing up a couple of times a year to talk about things that never get impacted is not going to attract the best directors.”
Director candidates are increasingly asking: “‘What am I there to do?’” adds Baumgarten. “We’re hearing this more and more. There is a desire for boards to be more and more effective. [Prospective directors] want to spend their time on what is going to make a difference.”
Company representatives, Smith says, need to actively go after the candidate they want. “Tell them the story about the impact you want to make and how the board member would also have an impact.”
The most dedicated directors are ones who want to play a significant role in guiding the business’ future. It also helps if the director not only has experience in an industry, but a passion for the company.
Finally, think about the “intersection of personal and professional,” Smith says.
When a board is ready to invite someone onboard, they should make a personalized pitch to appeal to that candidate’s interest whether fitness, culinary or philanthropic causes. For example, Smith is currently building a board for a fitness technology firm and one director prospect is a fitness enthusiast and is “excited about how tech can have an impact on fitness and the company.”