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A recent chat with a friend of mine, the Nominating and Governance chair of a Fortune 100 technology company, got me thinking about board refreshment.
He described a series of conversations with his peers in comparable companies about best practices for the Nominating and Governance committee. The day-to-day requirements of the Audit and Compensation committees are well-regulated and very clear. By contrast, there are no universal guidelines (and there is less scrutiny) for Nominating and Governance. Therefore, it makes sense that this function requires deliberate diligence.
My friend and his peers were lamenting the challenge of adding new board members. Where historically a strong CEO or CFO background was qualifying, today new board members must hit more skill bases. In addition, social pressures have added to the specificity of the qualifications required – for instance, "a Latino from Silicon Valley with international manufacturing experience," or "an African-American female with oil and gas experience," or an "Asian from Paris with connections to the inner workings of the Swiss banking system." Fill each of those specs and you've hit a double – or even a triple.
There seems to be no disagreement around the notion that a wide variety of qualifications is important to the smooth functioning of a board. Maybe, I suggested to my friend, the problem isn’t the specificity, but that we try to cram too much into the profile of a single new candidate when the rare openings occur. Why? Because so few of the current requirements are found in the skills and backgrounds of the existing directors.
Imagine how different this conversation might be if we were starting with the possibility of 10 openings to fill instead of one every few years.
Oh, wait – 92% of Fortune 500 boards have annual elections. So, on most boards the chair of Nominating and Governance is starting with an open slate. What a home run it would be if we used annual elections to make board refreshment a reality!
Founder and CEO
Trewstar Corporate Board Services