If you’re an executive interested in a board role, what’s the first thing you should do?
Over the past few years, we’ve seen board diversity become a top priority for organizations. Take a recent PwC study, for instance, which found that racial and ethnic diversity topped the list of most important attributes for incoming directors. This put it ahead of industry expertise, operational expertise, and gender diversity, which have seen the most progress in terms of board makeup in recent years.
Current directors know they need to step up to correct the lack of diversity, even if it means replacing fellow board members. PwC found that 71% of current directors acknowledge that the problem with board diversity won’t solve itself. Many directors are also interested in “refreshing” their boards by replacing at least one (47%) or two or more (18%) fellow directors.
Having a range of perspectives and experiences on a board helps improve its efficacy and drive innovation. And with recent changes in public, employee, and investor expectations (see Nasdaq’s new listing standards), organizations are keenly focused on broadening the membership bases of their boards.
What does this mean for executives? If serving on a board is of interest, now is the time to review your skills and motivations, understand expectations, and position yourself for opportunities.
Aligning Goals: Corporate vs. Nonprofit Boards
Serving on a board of directors is a great opportunity for executives to make an impact within an organization. Especially now as organizations navigate the changing environmental, social, and governance (ESG) landscape. There are also a number of personal advantages, including personal brand building, network expansion, and personal and professional development.
Before you begin to signal your readiness to join a board, one important consideration is determining the type of board that best aligns with your goals. The push for board diversity is happening across nonprofit and for-profit organizations, and the expectations for directors on each differs. BoardEffect shares some key differences to consider in your journey to getting a seat in the boardroom:
- Mission: Nonprofits and corporations can be mission-driven organizations. However, at nonprofits, board decisions are structured around the mission, vision, and values of the organization. Corporate boards also consider additional factors such as risk management, market climates, and investor needs.
- Finances: Corporate boards are interested in the financial long-term growth of the company, which plays into how decisions are made. Nonprofits often depend on donations, grants, and membership fees to operate, so their boards have to be focused on responsible budgeting.
- Structure: Where nonprofits are required to set up a board of directors, corporations only have to do so when they are publicly traded. (Private companies can also have a board of directors if it so chooses. Nonprofit boards also tend to be larger than corporate boards and the tenure for each member is longer.
Compensation is another important factor to keep in mind. Nonprofit boards are typically made up of volunteers, although some compensation is possible. On a corporate board, directors often receive a base retainer that depends on the size of the company, required meetings, and whether the company is public or private.
Identifying Relevant Positions
To learn how leaders can identify opportunities and serve effectively as a member of a board, we reached out to three current corporate and nonprofit board members for their expert advice. As you search for a board position that aligns with your values and goals, here are four ways to get started:
1. Understand Your Why
Before joining a board, one of the first things to do is take the time to understand why you want to serve on a board and what relevant skills you have. Racquel Joseph, Chief Experience Officer at Kindred and Board Member of the New York City Anti-Violence Project, recommends asking yourself questions to help take inventory of what you have to offer the organization.
“Do you want to leverage your current professional experience? Or lean into a skill you don’t get to use day-to-day in the office? What network can you offer an organization?” she asks. “There are a few different purposes of a [nonprofit] board as well, such as governance, fundraising and capacity building. You should have a picture of the type of board that would best suit your talents and board service objectives.”
2. Ensure You Have Internal Support
Serving on a board requires a time commitment that can potentially conflict with your day-to-day work responsibilities. If you’re working full-time, Lisa Shalett, Founder of Extraordinary Women on Boards and Kindred Member, suggests making sure your service is cleared with your organization. “Some do not allow [board service], and some may require you to make a case for it. Make sure you’ve thought through the time commitment. Ask if your CEO will support you in your board work and be a reference or be willing to make connections for you,” she says.
3. Turn To Your Network
When looking for board positions, your personal and professional networks can be a good source of opportunities, according to Shalett. “Most people don’t think about who in their network might have connections to boards, such that they could put in a good word for you,” she says. “Make sure your network knows you are interested in looking for board seats and want their help.”
In a similar vein, building relationships early is advisable, says Cat Hernandez, Partner at The Venture Collective, Kindred Member, and Founding Board Member of NYC Blend. Organizations may choose board directors based on specific areas of expertise, but that alone won’t ensure a successful relationship with founders or executive teams. “To the extent that it’s possible, you should get to know people over a longer time horizon so both sides have the best sense of what it might mean to work with each other in this capacity,” she says.
4. Do Your Research
Once you decide to join a board, Shalett recommends investing time on education to prepare yourself for the role. “There are some organizations that specifically exist for aspiring board directors so get involved with one or two of those. Look for newsletters on governance and risk issues,” she says. “If you can get your company to pay for it, see if they can send you to one of the board boot camps — Harvard, Stanford, and others have these, and welcome people not yet on boards.”
Other resources she recommends include Dambisa Moyo’s How Boards Work, Patrick Dunne’s Boards, the Harvard Law School Forum on Corporate Governance and Financial Regulation, and Stanford’s Rock Center for Corporate Governance.
Once on a board, participating effectively is key to getting the most out of your experience and making an impact. To this end, Hernandez recommends communication and openness. “Operate with good faith. Communicate proactively, especially about the most effective ways to work together,” she says. “Build a relationship with the rest of the board, and pay attention to the dynamics around the table.”
As ESG becomes more of a focus for boards — 64% of directors in PwC’s study said ESG is linked to company strategy — it pays to have an understanding of these issues. “In the current landscape, it’s especially important to understand workplace culture, employee satisfaction, and leadership efficacy as it relates to inclusion, belonging, and diversity,” Kindred’s Joseph says. Resiliency, success, and stakeholder relations such as community and climate impact are also additional areas of focus.
Increasing board diversity is essential to improving governance and driving the change that is necessary to build more responsible organizations. For executives ready for board service, starting early, understanding requirements, and tapping your existing networks will help you step into the boardroom.