The first piece of advice for would-be directors is to look long before leaping in. Be certain that you are prepared to take on the responsibilities and obligations of directorship.
As lines of accountability blur, stakeholder activism grows, media attention focuses and issues become more complex, fewer people are either equipped or prepared to take on this responsibility. These days it’s challenging task to possess the necessary good faith, care, skill and diligence required inside the boardroom.
As you think about how your skills and experience meet the needs of different types of boards, it is helpful to be aware of how the roles of boards vary. Are you, for example, contemplating the board of trading company seeking financial return? Or is it funding body with set budget allocation to distribute funds? Or maybe it is statutory commission meeting to consider matters of justice or specific issues?
And think carefully, about the amount of time you have available and the level of involvement expected of board member.
This will vary depending on things such as the strength and depth of the management team, whether or not the body is going through an initial establishment phase, length of service of the chairman or chief executive, or how particularly lacking board may be in terms of the expertise you can provide, either in the short or medium term.
What do boards want?
There is generational change occurring in the governance of New Zealand companies. Boards now want directors who are closer to age 50 than 70.
Whilst number of directors are still being appointed from the professional services sector – witness the recent appointments of Wayne Boyd and Rob McLeod to the Telecom board – there has been growing interest in appointing people with CEO experience and, in some cases, requiring those people to have an international business background.
Examples of non-executive directors who have had CEO experience are Ross Keenan (ex-Newmans), Dr John Hood (ex-Fletcher Challenge), Graeme Hawkins (ex-DB), Paul Byrnes (ex-Holeproof), Liz Coutts (ex-Caxton), Rodger Fisher (ex-Owens Group), Ted Van Arkel (ex-Progressive Enterprises), Colin Wise (ex-Quality Bakers), David Wolfenden (ex-Countrywide) to name few.
In some cases, companies seek individuals with experience in particular disciplines such as retailing, marketing, investment banking and so on.
There are also number of companies that are both enabling and allowing their own chief executives to accept at least one external directorship. For example, Ralph Norris, managing director and CEO of Air New Zealand, and Theresa Gattung, CEO of Telecom.
Those in demand and who are being appointed to boards appear to have different attitude to the number of appointments that they will accept compared to the previous generation of directors. They seem to limit themselves to four or five major non-executive directorships, whereas some of the older generation of high-profile directors held more than that, in some cases up to 13 directorships.
What candidates need
To enhance the likelihood of being invited to join board, you will generally need to have successful track record in the professions or in commerce. Having said that, academics, members of the community, politicians and some public sector people are appointed to boards of Crown Corporations, Crown Research Institutes, public sector entities and local authority enterprises.
Budding directors should have some governance experience with community, public or private sector organisations. So, the first step in seeking directorship could be to obtain number of community or public sector appointments as part of the networking and experience process.
It is worthwhile to obtain governance training on an Institute of Directors (IOD) programme. And it is important to stay up to date with changes in governance that, these days, are quite frequent.
Those interested in directorships also need to make as many people as possible aware of their interest in governance – including their local Member of Parliament – and to foster networking opportunities wherever possible. vital move in this regard is to join the Institute of Directors and attend various meetings and presentations as part of your network development.
Other worthwhile networking opportunities include participating in the activities of the Chambers of Commerce, the New Zealand Institute of Management and other professional associations, and registering with the Crown Corporation Monitoring Authority.
The time involved with networking can be demanding though, so choose your opportunities carefully and make good use of the time you’re putting in.
Finally, one of the most effective strategies for would-be directors is to register interest with search firms, such as Sheffield Accord. Consultancies such as ours are being used more often to ensure organisations’ transparency and objectiveness in the appointment process and to check that candidates meet the ‘merit’ test.
Sheffield Accord assists around 50 organisations year with board appointments in both public and private sectors. As part of making contact with search firm, it is worth seeking advice on the development of an appropriate curriculum vitae.
The invitation
Instead of just sitting around waiting for an invitation, it pays to constantly reinforce the network. Often the process of appointing directors is such that you don’t know whether you’re being considered until contact is made. For example, while search firm may discuss an extensive list of potential board candidates with the chairman or the head of selection sub-committee, mutually agreed approach priority is normally established.
This priority approach process ensures that largish group of very busy, highly qualified directors are not all burdened by what can be, at times, very lengthy selection process.
Private sector chairmen or selection committees will seldom arrange to meet more than one person for each appointment – that person then goes on to meet the full board if considered suitable. By that time, an appointment is almost certain.
The situation is little different with public sector appointments or the appointment of full boards where contestability around the merits and skills of individuals, in combination, needs to be weighed carefully. In these cases number of candidates will be interviewed for appointments.
In most cases, for both private and public sector appointments, reference enquiries are made on the person to be appointed, so it is important you think carefully about who will most judiciously comment on your achievements, potential and will, while having the credibility to represent you well.
Above all else, the tests all board members must pass are ones establishing that you possess integrity, wisdom, time, vision, expertise, the ability to absorb large amounts of information, energy and independence of thought.
At the same time, however, all directors will admit that learning the art of good governance is journey not destination. The rewards become greater as one practises harder to master the art.
Ian Taylor is partner and director of Sheffield Ltd and heads the firm’s Search Practice.
