Being named to a board of a directors at an established company may seem out of reach — especially if you’re under 50. Or a woman. Or a minority. Or you haven’t made it to the C-suite (yet).
But that’s not necessarily the case.
- Boards want new directors with expertise, especially in finance and technology.
- They also want greater diversity in age, gender and race.
- Directors have a fiduciary duty to shareholders and oversee CEOs.
- Public company directors spend roughly 20 hours a month on board service.
Open board seats are increasingly being filled by younger, more diverse candidates who hail from executive positions two to three levels below the C-suite.
“It’s a much broader array of candidates that boards are looking for,” said Lee Hanson, vice chairman of Heidrick & Struggles’ CEO and board of directors practice.
Last year, S&P 500 boards named 428 new directors, according to Spencer Stuart’s Board Index. Of them, 40% were women, 17% were under 50, and only a third were active or retired CEOs.
But if you’ve never served on a board before, how do you get your foot in the door?
What boards want
Since you won’t be allowed to join the board of a direct competitor, chances are you’d be serving a company in a different industry than the one you currently work in.
What a board wants are new members who have skills and experiences that are transferrable.
The exact qualifications desired will depend on the holes a board is looking to fill at the time of search.
Generally, boards need a mix of members with practical expertise — especially in the financial, digital and cybersecurity arenas — and operational experience running large teams and having profit-and-loss responsibilities for a line of business.
Having different perspectives professionally and socioeconomically is also more desirable than ever. Many boards want to boost diversity in age, gender and race and, when relevant, geography (e.g., it may be desirable to have someone who has lived in China recently).
Board recruiters are particularly looking for so-called “next-gen” execs under 50 who are tech-savvy but who also have a broad business perspective.
Getting selected can take months
There are a few ways to get your name thrown into the mix for consideration.
Letting people know you’re interested is a good first step. If you’re senior enough in your current role and have a relationship with high-level leadership, tell the CEO of your company or someone you report to on the executive team, Hanson suggested. If they know you well and would endorse you, they may mention you the next time they hear of a board position from recruiters, or otherwise learn of an open seat through their networks.
“Often that’s how we find the best people,” Hanson said. “A CEO may say ‘I’m too busy but you really should try so-and-so.’”
You should also target your own professional network of people who already serve on boards.
If your name is already known in your market, you may get a call directly from board recruiters.
When speaking with a recruiter or professional connection, try to be clear about what you want — and don’t want — so they can better target their recommendations for you.
For example, instead of simply saying you’d bring digital marketing expertise to a board, you might specify that you don’t want to serve on a company board in a highly regulated industry or in the tobacco sector. You might note whether you’re willing to travel for board meetings, which typically are held between four to nine times a year, Hanson said.
It’s also important to be realistic. If you’ve never been on a board before, you likely won’t be a candidate for Amazon or Apple right out of the gate.
If you’re less senior in your career and don’t yet have access to your CEO for advice, tap the professional network you do have for ideas and intelligence on different board opportunities that are available. There are also sites that list open board positions, especially for nonprofits, many of which are listed at BoardSource.
The advantages of joining a board
Serving on a board can help you grow professionally because it will expand your network and let you flex different muscles. It also can help you understand your own company’s board better and build opportunities to have a board career when you retire.
Then there’s the potential six-figure pay. The median compensation for directors on boards of S&P 1500 companies — which includes both cash and equity awards — approached $225,000 last year, according to data from AON.
But typically the smaller the company, the smaller the payout. The median was $166,278 for small companies and $123,230 at micro companies, according to 2017 data from the National Association of Corporate Directors.
Be warned, however. If money is your prime motivator, recruiters will see that as a big red flag.
If you’re joining a national nonprofit board, you should expect no pay.
“There’s typically an expectation that board members will make a personal donation to the organization and be helpful in getting their friends and network to do the same,” said Anne Wallestad, president and CEO of BoardSource.
What nonprofit boards and their recruiters are looking for is a real commitment to the work of the organization.
Know what you’re getting into
When you join a board, you assume fiduciary responsibility for the organization – that includes financial, legal and ethical responsibilities.
New directors may assume the board’s job is to manage the operations of the company. But that’s a big misconception, said Peter Gleason, president and CEO of the NACD. “You’re there to help guide the company, set strategy and handle risks.”
That means overseeing CEOs (including hiring and firing them), the company’s financials and the long-term strategic plan. It also includes analyzing the potential benefits of proposed mergers or sales.
All that entails reputational and legal risk for directors, especially when a scandal erupts, a CEO suddenly departs, activist shareholders make threats, or any negative event for which the board may be held responsible (see, for instance, Wells Fargo, Uber, Theranos and Enron).
“As a board director, you’re going to get sued at some point, whether or not it’s with merit,” Gleason said.
Typically, the company will purchase directors and officer liability insurance to protect board members from being held personally liable, and individual directors can buy extra coverage for themselves.
And come prepared to work. Board service in public companies consumed about 20 hours a month of directors’ time, according to an NACD survey.