How to competently strengthen the Board of Directors?
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To be complete and to add value to the company, the Board of Directors must include several independent directors. Therefore, when we talk about search, we mean search from outside, and not within the organization. The more independent directors there are, the more benefits the Board brings to the business.
There’s a paradox: there are many candidates wishing to be elected to the Board of Directors, but when you start getting to know the candidates, only a few remain. This is partly due to high requirements. But it is much more important that only a few understand what kind of work it is and are ready to get involved in the process itself.
To begin with, let’s list the basic requirements for the Board composition.
Digital competencies. A modern Board of Directors must have a professional “skilled in IT and digital”.
Knowledge of the e-commerce market and marketplaces. Even companies that previously had a very indirect relationship to the consumer market are now looking for strategists who understand what e-commerce is.
Flexibility and speed. Making decisions in a situation of uncertainty and instability is the task of any leader on the Board.
Experience. As a rule, you need managers who run a business of the same or larger size. Another fundamental point is the experience of each director in different industries and different companies.
Basic competencies of a manager. Of course, the key competencies are strategic thinking, understanding long-term consequences, stress resistance. A candidate for the Board of Directors is required to have a balance: on the one hand, the ability to make other people hear you; on the other, listen to others and be able to negotiate. And of course, the talent to motivate.
How to find such people and make the right choice?
Monitor successful cases, select according to the task facing the business, do not be afraid to change people on the Board more often. If a company undertakes an IPO, the Board definitely needs a CFO who has recently led such a process. Is the key goal of the company digital transformation? List companies of comparable size that have implemented a digitalization project, review their Boards of Directors. If there is no BoD, look at the CEO, Strategy Director, or business owner.
Look in other industries. If a Russian company is faced with the task of creating a new marketing strategy and strengthening the Board with a Head of Strategic Product Promotion, then the best candidates are from international FMCG corporations or Russian tech giants. But back to the first point: look at the companies that have done similar projects, and at the specific people who have implemented this and who have proven experience and practice.
The diversity principle works great for the Board of Directors: the more people with different views on the problem and different experiences there are on the Board, the more effective the body is. The Boards don’t need like-minded people who agree with each other.
Estimate the real-time the candidate is willing to spend on you. The main stereotype that we face is: “You get a lot of money, you spend several hours a year at meetings, you don’t really need to do anything.” In fact, every Board meeting requires hours of preparation, metrics analysis, digging in numbers, and some serious diving.
Ask the candidate the right questions right away:
1. “Why do you want to serve on the Board?”
Correct answer: “I am interested to participate in the strategy to move the company forward and apply my knowledge”.
2. “How much time are you willing to spend?”
If a person says that 4 meetings a year are 10 hours of his/her time, then this is not your person.
Be sure to evaluate. Flexibility, strategic thinking, stress resistance, leadership are excellently assessed by professional methods, primarily the Hogan and Talent Q questionnaires. The assessment and recommendations of other colleagues in the market should be a mandatory stage of selection to the Boards, which are still formed on the basis of acquaintance and friendship.
Look for the successful and wealthy. As practice shows, people who have already achieved financial well-being and have proven everything to themselves are ready for real outputs. They have a completely different motivation: they go to the Board not for the sake of money, but in order to apply their accumulated experience and knowledge and expand their horizons.