Buddy boards fall out of fashion: Spencer Stuart
A shift to stocking boards with expertise is underway
In its 2011 Canadian Spencer Stuart Board Index (CSSBI), the eponymous global executive search firm noted Canada’s top corporations are – after chugging along like a Model T for years – tuning up their boardrooms. They’re shifting to what the firm calls “high performance boards.”
As demographics shift and older directors shuffle out of the boardroom, board seats are opening up. But the corporate board game has changed dramatically the past decade. There are fewer clubby tap-on-the-shoulder appointments these days.
In 1997, when it began looking at Canadian boards, Spencer Stuart found few corporations performed board evaluations, a fact that often bred complacency and, in some cases, corruption. Now, according to the CSSBI, every single company on its 100 list – a list of the top Canadian corporations Spencer Stuart analyzes – does a review of its board, its various committees, and individual directors.
There has also been a distinct shift to stocking boards with more industry expertise than in the ’90s. Now it’s common to find three or four members of a board who might legitimately qualify as an “expert” in a particular company’s sector. And then there’s the concern about over-boarding, where one individual may sit on five or more boards. That’s become unacceptable.
For the rookie director wannabe, the trends present both opportunity and challenges: What do you have to do to get seated in the corporate control room?
“In the old days,” says Stan Magidson, president and CEO of the Institute of Corporate Directors (ICD), “getting on a board was very much about who knew you and who you knew. But there is a greater formality today about how boards are going about their searches. It’s now common practice for a board to put together a matrix of the skills that they view as important to properly round out their board oversight role.”
Increasingly, says Magidson, the best boards go through their nominating committee’s formalized process to identify candidates. And some firms are increasingly engaging search firms or using resources like the ICD’s Directors Register. Started five years ago, this complimentary referral service profiles experienced and emerging directors and offers customized one-on-one consulting to match potential directors with boards.
Don Chynoweth first decided to seek out some board positions about three years ago. Currently senior vice-president, defense programs, for SNC-Lavalin O&M, Chynoweth took the ICD director education program.
After completing the ICD program, Chynoweth put out the word through personal contacts that he was gunning for board work. He had himself listed in the ICD’s Directors Register. He also started ferreting out which boards were looking for new brainpower, who was on the nominating committees, contacting them, and letting them know what skill sets he had that might fill a gap in a boardroom’s intellectual toolbox.
“You do ask around. Who is going to have board members that are retiring? What’s their orientation process like, their recruitment process for new members? Is it an Old Boys network?”
Chynoweth was first appointed to a for-profit seat by his employer, SNC-Lavalin, for AltaLink, its wholly-owned subsidiary. Next came a seat on PotashCorp’s board.
Though the PotashCorp offer came through a personal contact, Chynoweth was still put through the kind of rigorous process – including about a half-dozen interviews – that is becoming common in corporate Canada. Chynoweth’s advice to other rookie directors is to highlight your particular strengths and knowledge to nominating committees. For him, it was his international experience and work with various governments and aboriginal groups over the years.
And forget about schmoozing, which might have worked 10 years ago. Today, says Chynoweth, boards want director selection “to be a fair and open competition.”