Corporate boards were once a bastion for the Old Boys’ Club with a traditional board culture that reflected the sameness of the members’ interests.
Jason Hanold, CEO of Hanold Associates, a boutique executive search firm, shares why board culture does matter now more than ever before.
Today, we’re working with corporations to transform boards into dynamic teams of busy executives who have relevant experience in areas of most concern to corporations, such as cyber-security, digitization and diversity.
One of the major reasons for the change in board culture was the Sarbanes-Oxley Act (SOX) of 2002 which increased the accountability of board members. As a result, companies started using executive recruiters to conduct an objective search while diversifying the traditional board composition.
You can’t underestimate the power a board has on the culture of an entire company because it recruits, hires, retains, compensates and can fire the CEO, who sets the tone for the culture, operation and results of the company. The board members basically have their hand on the cultural lever, driven directly and indirectly through their actions.
As boards work with firms to identify board members from outside the existing members’ social and professional circles, there has to be a focus on the inter-personal dynamic because it’s not always easy to find a cultural fit.
When starting a search, recruiters will conduct a board composition study to determine what current levels of expertise exist on the board and where the organization is heading strategically. This informs the skills gaps or expertise needs of new members for the board. The culture of a board is important because if members enjoy the board culture, they are more likely to “lean-in” and participate, attending more often.
CEOs will often find value in being on a board of another company because it informs how they interact with the board of their own organization. It is a terrific way to stay learning and connected outside of their own companies and align to a company for which they have a particular passion.
The precise skills sought for a board position vary, but the characteristics and leadership qualities that are most coveted include diligence, transparency, willingness to be vulnerable (admit to not knowing an answer), driven, hands-on, curious, practicing an obligation to dissent, strong in building relationships and serving as a wickedly competent problem-solver.
The next time, you’re looking to fill a board position, consider the overall importance and impact this individual can make on the company, but also the board composition and culture.