Boards say they are making a conscious effort to increase trustees’ diversity and set term limits, but they appear to have a ways to go.
A Deloitte survey of 300 corporate board executives showed:
- While 9 in 10 leaders agree that term limits are useful and 87% that believe there should be term limits, 53% admit to serving on boards for over 11 years, and only 5% of large-cap companies have term limits.
- Approximately 1 in 2 boards with succession plans do not retain a process for recruiting candidates with diverse skillsets.
- 94% expect concerns to arise if a candidate considered lacks prior executive experience.
- 87% of board members indicate they continue to source talent from a relatively small and similar pool of retired or acting CEOs.
- When compared with broader criteria, including diversity, 44% still consider C-suite experience the cost of entry
While the survey presents a picture of scarce progress, there are those who say steps are being taken by progressive thinkers.
“Progress is being made especially around boards that use strategic succession planning—assessing, selecting, and development of Board of Trustee members based on board leadership competencies,” said Tracy Duberman, CEO of The Leadership Development Group. “A strategic gap analysis, a process that identifies the most critical competencies required for board success, allows a board to focus on selecting for the vital competencies deemed critical during candidate selection.”
Critical competencies include: impact and influence, innovative thinking, ecosystem awareness and strategic orientation. “The level of experience working with complex issues and various levels of management will provide an added capability to the board. The competency-based approach raises the level of trustee selection,” Duberman said.
As for how to align the board, take a fresh look at what it has been and what it can become, some analysts say.
“Be creative in exploring a wide array of possibilities,” said consultant Liz Bywater. “Don’t just seek to recreate the board you have today. Changing conditions and a dynamic landscape may require a different approach and a new constellation of members.”
It’s best to “prepare new members quickly,” Bywater said. “Develop an onboarding experience that will allow your new board members to quickly learn about the business, the board, and the kind of contribution he or she is expected to make. The sooner you advise and assimilate your new members, the more rapidly they will add significant value.”
Be aware “of team dynamics on the board,” Bywater said. “While you don’t want new members to simply “fit in,” you do want people who will work well within the organization. The ability to form strong relationships, communicate effectively, challenge without bullying and engage in robust dialogue are all key elements of productive board membership.”