THIS IS A GREAT ARTICLE EXPLORING WHY HIGHLY MOTIVATED AND ETHICAL INDIVIDUALS STILL SEEK BOARD POSITIONS. THANK YOU TO THE AUTHORS and http://deloitte.12hs.com/S1/TJ4SHC59C4JSW8/M/ Deloitte Corporate Governance Newsletter where the article was published.

"While experienced executives continue to see great value in serving
on a corporate board, they want to serve on the right board. In general,
directors want to join boards where they will have the opportunity
to learn, where their talents and expertise will be valuable and
where they can make a difference to the company. They want to be a
part of a high-performing team and respect the people they areworking with on the board and in management."

susan s. boren, Minneapolis/St.Paul
will dawkins, London
phil d. johnston, San Francisco
bertrand richard, Paris
Directors’ motivations for
joining a board

Why they still do it
Despite the occasional anecdote about a director vowing never to join another public
company board, experienced directors are not fleeing boards in droves. Yet, one could
be forgiven for assuming that at least a few directors are asking if board service is
still worth it, in light of the sky-high expectations on them, the significantly greater
time demand and the challenge of keeping up with the dizzying pace of business.
Several forces have converged to make board service more complex and challenging today:
New regulatory requirements. The global financial crisis and isolated business scandals have renewed focus on
board governance and, in some places, led to new governance rules and requirements. Regulations differ by country and
region, but many of the new requirements center on a few areas: board composition, director qualifications, executive
compensation and risk management. While it may be too soon to know the impact of regulatory changes on board composition
and operations, some directors fear that the balance of the new governance rules “is tipping from substance to
form, and regulation has now tipped to incompetent intrusion.”
Shareholder activism. Investors are pushing for more influence on key issues, including board composition and executive
compensation — and, occasionally, gaining new tools to exert their views, such as the new proxy access provision
in the U.S. While many directors welcome the increased dialogue with investors, there are frustrations: the check-the-box
mentality of some institutional shareholders, the vast influence of ratings agencies and the pressure for immediate and
unsustainable results.
A higher degree of scrutiny. Ten years ago, the chances of a
board of directors becoming front-page news were slim. Today,
when a business faces a crisis or erosion in performance, the
board’s action — or inaction — is examined nearly as closely as the
CEO’s. As one director observed: “There’s no hiding anymore.”
A growing agenda. Boards are spending more time discussing
issues such as risk, executive compensation, the environment and
corporate responsibility, as directors take a more expansive view of
their responsibilities. The financial crisis and economic downturn
elevated the importance of risk and remuneration in the boardroom,
but directors also feel pressure to take on issues such as the environment
and corporate ethics in response to their growing visibility
with investors and society as a whole.
Changing board dynamics. Finally, boards themselves have
changed. As a result of increased specialization, the growth in the
number of first-time directors and greater gender, ethnic and geographic
diversity, directors find fewer people “just like me” seated
around the board table. Led by the chairman or lead director, the
board has to create an environment that harnesses these different
perspectives. And, with so many responsibilities, directors are holding
each other to higher standards. “Accountability is far greater
today, and that has real implications for the involvement of board
members. A board member who doesn’t work is immediately detected,
as well as an incompetent one, which was not always the case
before. Board meetings are no longer a club meeting,” said
Christine Morin-Postel, currently a board director of British
American Tobacco, Exor and Royal Dutch Shell.
what do directors want? priorities
for serving on the right board
The current environment creates some real challenges for boards that
need to recruit directors. Because of the scrutiny on them, boards
must be very thoughtful about defining the necessary skill-sets for
new board candidates and recruit directors who have those skills and
a reputation for working hard, contributing to board discussions and
respecting management and their colleagues on the board.
As important as it is for boards to carefully define the capabilities
and qualities of the ideal board candidate, boards also must remember
that director candidates weigh a variety of professional and personal
priorities when considering an invitation to join a board.
Understanding what’s important to director candidates will be increasingly critical to recruiting new board members.
So, why do directors join a board?
Directors tell us that they find great professional satisfaction from
contributing to the performance of a company and personal satisfaction
from challenging themselves in a new situation.
“Certainly, part of the reward is yourself versus all the challenges
we’ve been talking about. Can you do this? Can you be effective in a
new context?” said Chris Gibson-Smith, chairman of the London
Stock Exchange. “Another reward is the opportunity to learn. If we
think of ourselves in medieval terms, we go on an apprenticeship
and eventually become a master craftsman, but the journey never
stops. That’s rewarding.”
For John Wiehoff, chairman and CEO of C. H. Robinson and a director
on the Donaldson and Polaris boards, an important reward for
serving on an outside board has been the insight he has gained to
improve how he works with his own board. “Board service has
taught me to simplify and prioritize with my board. I’ve learned as a
director that it’s very challenging to stay on top of things in between
meetings. As a CEO, I’ve had to learn that even though my directors
are very smart, committed people, they can’t be expected to remember
the details of my business.”
While experienced executives continue to see great value in serving
on a corporate board, they want to serve on the right board. In general,
directors want to join boards where they will have the opportunity
to learn, where their talents and expertise will be valuable and
where they can make a difference to the company. They want to be a
part of a high-performing team and respect the people they are
working with on the board and in management.
We hear from director candidates that the intangible rewards of
board service — affiliation with highly respected companies and
other directors, exposure to other governance processes and the
opportunity to gain new ideas valuable to their own company —
continue to be important factors in the decision to join a board. For
most director candidates, choosing the right board involves a formula
with multiple factors. Below are a few of the most common:
Industry and company size. For many directors, a company’s
industry sector is one of the most important considerations. Is the
industry interesting to them? What they can learn from it? Do they
have experience in the industry? Director candidates also may look
at the regulatory framework governing the industry or the issues the
industry faces. For many director candidates, especially those who
are active executives, the ideal match is with a company in a complementary
industry, such as an industry experiencing similar
growth patterns or addressing similar challenges.
Company size also can be a consideration. Depending on a director’s
interests, he or she may prefer a board assignment with a large
company for the exposure to world-class executives and directors
and the opportunity to tackle complex global issues, or a small company
assignment for the cutting-edge technology or ability to have a
larger-sized impact. Some director candidates view their board work
in terms of building a portfolio of assignments with different sized
companies and in different industries.
The fit with the CEO and chairman. Comfort and compatibility
with the CEO and the chairman also are very important considerations
for most director candidates. Experienced directors advise
director candidates against joining a board where they have questions
about the performance or the ability of the CEO, or if they get
the sense that he or she doesn’t value the board and its role in the
company. Said one director: “Unless it’s a role that requires the
removal of management, I wouldn’t work in a company where I
don’t think I’ll get on with the chief executive.”
The quality of the governance. Directors want to join a well-functioning
board that plays the appropriate role in the major strategic
decisions of the company and to be comfortable with the company’s
business and governance practices. Directors look at the quality of
the governance processes, the independence of the board and the
management’s attitude toward the board.
The challenge. Does the company have stimulating challenges
related to growth, recovery or something else? Some directors tell
us they are excited by opportunities to participate in a turnaround or
the rebuilding of a company that is struggling or to be a part of a
board that has to select the next CEO. As one director explained, “It
is more exciting when the company faces problems, because it is
then that the board is the most useful.”
The strength of the company. While some directors relish the
idea of helping to turn a company around, others are drawn to toptier
organizations that have healthy financials and an excellent reputation
— those that seem unlikely to fall victim to a major scandal
or business disruption. These directors look closely at the financial
strength of the company and its competitive position in the marketplace,
and want to be comfortable being affiliated with its reputation
and values. Some director candidates report that they conduct more
rigorous due diligence than in the past about the company’s financials,
reputation and governance through extensive interviews with
current directors and senior executives and careful reviews of publicly
available financial information. They also mine information
from contacts in the industry and other trusted business sources,
check the company’s corporate governance ratings, examine its public
policy positions and speak with industry and financial analysts
about the company.The other board members and the chemistry between them.
Director candidates always want to know who already serves on the
board they are being asked to join. For some, the opportunity to
work closely with and learn from business leaders they respect is as
much a motivation for joining a board as what they can learn from
the company. In addition, directors want to avoid boards that are
rife with conflicts or lack the independence from the CEO to do their
work. While it is impossible to know precisely how a board will
behave until one starts, it helps to meet as many directors as possible
and learn about them and their work styles through mutual
friends and colleagues.
The time commitment and potential scheduling conflicts.
Serving on a board today takes much more time than in the past,
directors say. The time demand is even greater for companies that
are restructuring or undergoing a CEO transition. Director candidates
want to be comfortable that their schedule can accommodate
a new board assignment, and many directors now limit the number
of public company board roles they will accept.
implications for director recruiting
Recruiting new independent directors today can be difficult and time
consuming. The desire for specialized expertise and increased diversity
in the boardroom — and in some cases the requirement that
boards become more diverse — has increased competition for
some candidates. At the same time, many directors are accepting
fewer board assignments than they did in the past and more companies,
particularly in the U.S., have restrictions on how many additional
outside board roles a director may accept. As a result, many
directors are more discriminating than in the past about which
boards to join.
Boards can improve the chances of attracting directors with the
most relevant experience by understanding the motivations and
concerns of director candidates and the company’s perceived
strengths and weaknesses. Here are a few lessons from the front
line of director recruiting:
> Assume that there will be good competitors for a candidate’s
time, whether it is another board opportunity or another interest.
> Understand your board’s “value proposition,” based on where the
company is strategically, the kinds of issues that come to the board,
the composition of the board, the strength of the management
team and even the quality of the board’s new-director orientation.
> Carefully define the expertise that is important for the board, for
example, industry or functional knowledge, language ability or
international business experience.> Continuously review the board’s skill-sets relative to the company’s
strategy and direction to ensure that the board as a whole
has the knowledge, experience and skills to guide the management
team as it addresses new challenges and market opportunities.
The annual board self-evaluation is a natural platform for
the full board to review its composition and discuss the expertise
that it will need in the future.
> Define the board’s notion of chemistry and promote an environment
that encourages active participation by every director and is
respectful of differing views. The chairman or lead director plays
an important role in creating this environment and getting contributions
from everyone around the board table.
> Make board service a rewarding experience for directors. Tap into
the expertise and brain power of directors by structuring board
meetings in a way that gives directors the opportunity to engage
with one another, rather than having a series of presentations.
CEOs gain additional benefit when they develop one-on-one relationships
with individual directors.
Experienced directors want to serve on well-managed boards that
make a difference in the performance of the company. They want to
work with smart, engaged directors and be comfortable with the
CEO’s leadership capabilities and character. Finally, they want to
serve on boards that allow them to learn and build new skills. When
they find board opportunities that offer these professional and personal
rewards, they are willing to accept a new director role —
despite the pressures and demands.
about the authors
Susan S. Boren is an active member of the Board Services, Life
Sciences and Education, Nonprofit & Government practices. She
also is a member of the Spencer Stuart board. Will Dawkins leads
the Board Services Practice in the U.K. Phil D. Johnston is a member
of the Board Services, Human Resources, Life Sciences, Private
Equity and Technology, Communications & Media practices, and he
manages the firm’s Singapore office. Bertrand Richard co-leads the
Board Services Practice in Europe and also the Financial Services
Practice in France.
Patrick B. Walsh contributed to this article.