Finding a Director for your Board

 
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A strong, effective board is a key contributor to the success of both for profit and not-for-profit organizations and any search for a director should begin with a gap analysis of your existing board. What qualities are not well represented on the board? Is your board following best practices in terms of composition? Are legal requirements being met? For example, is your audit committee comprised entirely of financially literate directors? There are, of course, many other questions you will need to answer and the CICA publication
20 Questions Directors Should Ask about Building a Board is a great resource to help you build a strong board. It answers questions such as: What are the independence requirements for directors? How many directors should we have? And what skills and experience should directors have?

Although all boards have the same underlying governance responsibility — establishing and monitoring the long-term direction of the organization — there can be considerable variety in the structuring of board activities and the actual jobs that directors of not-for-profit organizations are expected to perform. A key factor in this is the mix of volunteers and paid staff. In organizations with professional staff and management, directors generally spend most or all of their time on governance. In many cases, however, directors may also be expected to participate in fundraising and other operating activities. In smaller organizations, particularly those that are all-volunteer, the directors may be actively involved as volunteers in operations (often as chairs of working committees) and board meetings can involve considerable time on operational matters. Governance is just one of many things that the board of a not-for-profit organization handles.  For not-for-profit organizations in which much of the work is done by volunteers, the board needs a way to oversee the activities of working committees without becoming too involved in details and losing its perspective. Directors must recognize that individual board members who chair working committees are wearing their "volunteer hats" when they report to the board on the committee's activities, while the rest of the board members wear "governance hats". An alternative approach is to assign responsibility for several working committees to one or more vice presidents or other board members who act as liaisons between the committees and the board.  For further information on the governance of a not-for-profit, refer to the CICA publication 20 Questions Directors of Not-for-Profit Organizations Should Ask about Governance.

For both for-profit and not-for-profit organizations, a board should be made up of directors who individually support the strategy of the organization and collectively have the skills, knowledge and experience it needs. The objectives should be to select qualified individuals who will serve the organization well and to achieve continuity through a smooth transition of board membership that balances new ideas and energy with experience and “institutional memory”.

Noted below are specific qualities to consider in choosing the right candidate for your board.

Work Experience — What type of work experience does the candidate have?  Business experience in education, business, a profession, and public service could all be an asset to your board.

Board Experience — Consider both for-profit and not-for-profit board experience.  While there are some differences, many of the skills learned in one area are transferable to the other.

Education — Candidates should fully understand the legal and other responsibilities of a director. 

Ethics/Integrity — Candidates should have the highest moral and ethical character.

Courage — They should have the courage to ask tough questions and to voice their support of, or opposition to, proposals and actions. Their loyalty to the stakeholders' interests may demand that they express dissent and persist in demanding answers to their questions.

Individual Character — Candidates should have personal qualities to be able to make a substantial active contribution to board deliberations. These qualities include intelligence, self-assuredness, inter-personal skills, independence, a willingness to ask difficult questions, communication skills and commitment.

Availability — Candidates must have sufficient time available to discharge duties of board membership.  Not only should they attend meetings, but they should fully review materials and actively participate in the meetings.  The number of boards the candidate already serves on should also be considered.

Compatibility — Candidates should be able to develop a good working relationship with other board members and management.

Dependability — They need to do their homework and attend and participate in meetings.

Good Judgement — They should be able to focus on the important issues and base their decisions and actions on wisdom, sound business practice and common sense.

Skills — Probably the most important quality candidates should bring to your board is a set of skills that ensure your board comprises the skills it needs to fulfill its duties and legal obligations.  The skills sought will depend on the skills your board needs that are not currently provided by other directors and could include:

  • Accounting and Financial (financial statements, auditing, performance measurement, risk management, taxation, merger/acquisitions and sources of finance)
  • Business Law (contracts, environmental regulations, and intellectual property)
  • Human Resources (compensation, employee relations, performance evaluation, and succession planning)
  • Information Technology (eCommerce, IT management, Knowledge Management, and IT outsourcing)
  • Marketing/Sales (Advertising, Customer Satisfaction, Marketing Research, Public Relations and Sales Management)
  • Operations (Production Processes, Quality Management, Supply Chain Management and Product/Service Development)
  • Business Planning (Business Plans, Market Analysis, and Strategy Development and Implementation)
  • Governance Skills (Roles and Responsibilities of Directors, Board Leadership/Effectiveness, and Corporate Governance Legislation)

Once you have identified the qualities of the director you are seeking, it is time to begin your search. Traditionally, the primary sources for board members have been the personal contacts of the CEO, Chair, other board members, corporate secretaries and senior management. Many fine directors have been recruited this way but there are risks in drawing from such a limited pool of candidates. The resulting board may be too much a group of friends who hesitate to question and challenge the CEO and other board members. The approach also potentially limits the range of talent and experience that is available to the board. Along with going against best practice, it may also go against recently introduced independence regulations.

Finding candidates outside of the traditional networks can be a challenge but there are both new and traditional resources to help you. Many executive search firms have long offered "board search" services. There are also growing pools of individuals who have taken steps to qualify themselves as directors. A combination of education and relevant business experience may be as valuable as extensive board experience. Consideration should be given to the graduates of director accreditation programs such as those offered by universities, often in collaboration with other organizations like the Institute of Corporate Directors and the Conference Board of Canada. In addition, the Directors Source site is a great way to help you find new directors.  With its database of financial experts who have significant board and corporate experience, it is an ideal way to reach a pool of interested and qualified candidates.