By Simon Rumore, Peakstone Managing Director
Capability is the C word most commonly referred to when discussing appointing directors to a Board or members of a Committee. While Capability is of critical importance, there are four other Cs to take into consideration: Commitment, Capacity, Character and Culture.
Commitment
Assessing potential Directors’ commitment – their alignment with your organisation’s purpose, vision, and mission – is paramount when recruiting.
For example, for the Board of a disability organisation, you would want to know if the individual has relevant lived experience with disability either personally or with family and other loved ones. While commitment is especially relevant to volunteer Board positions, it is also still relevant to paid Board roles too. Recruiting someone to your Board whose prime motivation is to be paid for their time is likely to lead to a misalignment with your Board’s culture and vision for the organisation, and eventually a failing to deliver the outcomes and impact you aim to achieve.
Capability
Being across your Board’s skills matrix and the missing or under-represented abilities on your Board is a key ingredient to your success. This is why capability is the number one C mentioned in Board recruitment. But as you can see, I rate commitment ahead of anything else.
That doesn’t mean capability isn’t essential. The tried and tested elements of technical and industry skills and experiences as a Director or executive will always be a constant in Board recruitment. Historically, the most commonly sought-out skills have been financial, legal, risk, and strategy development and delivery. Ensuring these skills are represented on your Board should almost always get you through the day-to-day.
Having said that, these common skills and experiences need to be looked at in conjunction with newer/emerging skillsets such as information and technology (including cyber and AI), human capital management, being across sustainability issues presented by our changing environment, awareness of the influence of social factors on the business community, as well as the evolving need to be financially sustainable to achieve your purpose, vision and mission in the medium term.
Capacity
Too often we see Boards being bowled over by a potential new Director’s experience and/or profile without really questioning their capacity to deliver for the Board. It’s a big risk for any Board to appoint a director who is over-committed with other roles, be these other Board roles, executive/professional roles and/or personal commitments.
It may be tempting to assume that an individual who has completed their executive career and only has non-executive roles will automatically have the capacity to be of value to your own Board. But the key question is how many other Board roles they have, including leadership roles such as chairing the Board or committees?
The Australian marketplace has examples of directors who are Board Chair of three substantive organisations and a Director on two other boards. If a common, current benchmark is used to equate a single Chair role with three Director roles, how can one individual effectively manage 11 Board roles? In fact, is this in line with the Director duties as outlined in the Corporations Act, especially to ‘act with reasonable care and diligence’? Additionally, where is the surge capacity for when one of these organisations is dealing with a crisis generated either internally or externally?
While it may be tempting to welcome a high-profile person to your Board, it’s important to question whether they have the capacity to fulfil their duties if your organisation is to succeed in the long-term. Their connections and expertise may be highly attractive, but if they cannot contribute to the Board meaningfully due to capacity restraints then you are effectively going to find yourself one director down while also preventing someone else from taking on that role and workload.
Character
In this context, character is the essence of a person. In order to establish a person’s character and how that will fit with and enhance your Board, ask both them and yourself the below questions to establish the unique qualities of the Director/s you are recruiting:
- How do they express their views and opinions?
- How flexible are they in adapting to different points of view and contribute a Board’s cognitive diversity?
- What is their temperament in dealing with challenging and changing circumstances?
- What is their preferred decision-making style?
- How will they fit within the current Board dynamic?
- How do they engage with fellow Directors and management?
If you don’t address these questions you could end up with Board disharmony. Boards need to be able to have effective, robust discussions for the best possible decisions, at a point in time, for the benefit of the organisation and its stakeholders. That has to be actively managed and that onus sits with the Chair. That’s why the role of the Chair is so demanding and so critical; if someone is too forthright or even too reserved, that has to be actively managed.
Culture
More than ever directors and the organisations they serve and for which they are stewards are being held accountable for the development and monitoring of organisational culture. This is not an easy thing to do for individuals not involved in the day-to-day management and operations of the organisation. This is complicated by Boards that may not reflect the culture of the organisation that they are overseeing.
Establishing the values of an organisation and the people who serve on its Board, or who may join the Board, is an important part of being aware of culture. We all know that culture can be constructive right through to toxic, both within the Board and an organisation.
That’s why it’s important that potential directors understand the values of your organisation along with your Board culture, and that they consider how they align to their own personal values.
They also need to be willing and able to set the ‘tone from the top’ by living those values in board and committee meetings, in interactions with management/employees, members/shareholders and other key stakeholders such as governments and regulators.
We hope this advice helps you recruit the right people to you Board. We’d love to hear about how useful you found this via discussion on our LinkedIn page.