Boards of directors used to be almost entirely composed of former Chief Executive Officers and other C-Suite executives. This has changed over the years—in 2018, 65% of new board directors were not part of the C-Suite, Egon Zehnder reports. However, this does not mean that the skills and experience necessary to become a board director have diminished. Companies are still looking for highly qualified individuals, especially those with significant P&L experience.
Do I qualify to be on a Board of Directors?
An ideal candidate would be a leader in their field who has closely worked with boards before. The individual should also understand the inner workings of a company, both financially and operationally. In the 2020 Annual Corporate Directors Survey, PwC found that 89% of board members found financial expertise to be a plus. The remaining 11% found the skill somewhat important. The second most sought-after skill was operational expertise, which 53% marked as very important. This does not necessarily mean that you have to be a Chief Financial Officer or a Chief Operating Officer in order to attain a board directorship – Deloitte states that any experience with reforming compensation plans, assessing and retaining talent, or innovating new strategies are all valuable to a board table. In particular, high level roles in risk, compliance, M&A, and crisis management, product development, marketing, sales and digital technology are all items that stand out to a company looking for a board director.
In fact, anything that stands out is a good attribute for anyone seeking board positions. Research continues to show that diversity on boards has been on the rise, in terms of both inclusion as well as breadth of expertise. Board directors of disparate ages, varying professional or economic backgrounds, and dissimilar industries bring differing perspectives into the board room. Not only does this help companies get ahead of public scrutiny of leadership, says The Harvard Law Forum on Corporate Governance, but a variety of contributions allows companies to better anticipate challenges and creatively address issues.
Serving on a board is not a decision to be made lightly—directors will be leading the company through major corporate events such as litigations, mergers, bankruptcies, and crises of all kinds. As such, companies will also be looking for someone with integrity and loyalty as well as dedication. Furthermore, as board directorships are closely tied to company and stock performance, companies will not accept any individual who is only available for a short period of time.
Finally, those looking to become board members should reflect on whether or not they have the wherewithal to participate in governance. The National Association of Board Directors states that the average amount of time spent on board matters per director was 245 hours per year—just over six work weeks. Employees who wish to continue their full-time job while serving on boards will have to inform their employers of the arrangement and confirm that they have the go-ahead as well as the ability to carry out both roles.