Executive Corner This is a fortnightly column featuring leaders in the executive search industry Practical approach to training company directors by Chris Johnson External consultants can help in developing board-level talent In the wake of recent well-publicised corporate failures, companies and their stakeholders are more focused than ever on the need for strong corporate governance and genuine expertise at board level. As a result, extra attention is being paid to ensuring that senior appointees have the knowledge and range of competencies to fulfil the duties required of them. "The scrutiny that exists today demands that all directors are professional, technically up-to-date and credible," says Andrew Banks, managing director of Talent2. "Boards must operate at their utmost efficiency and shareholders place considerable value against this." Therefore, under the name of Talent Partners, the firm has specialised in board-level recruitment and training, alongside its other general recruitment and HR outsourcing activities. They provide consultancy services in everything from induction, assessments and designing development plans for individual directors to CEO reviews and establishing key performance indicators to measure effectiveness. "In our experience, clients often need assistance in defining the role of the board. Sometimes they are a bit too operational or too hands-off in the way they do things," says Mr Banks. "We can help them recruit and develop directors with the necessary skills and experience, and get them to focus on important issues like succession planning." For example, if it is known that directorships are held for three or five years, the firm can assess requirements and line up qualified candidates well in advance. Mr Banks explains that Talent Partners is often called in during a period of transition. This might be the appointment of a new chairman or when a new shareholder takes a proactive approach to improving overall performance. Typically, the process involves an initial meeting with senior figures and a review of the board charter or memorandum. Interviews then follow to establish both group and individual needs among the various directors in terms of their financial, legal, corporate governance and specialist expertise. Problem areas are identified, an action plan agreed, and regular progress reviews are conducted. Clients often need assistance in defining the role of the board Director education "We have worked with many different boards, so can provide objectivity and offer something which is not just a theoretical approach," Mr Banks says. "If there's a need for additional director education, we design appropriate programmes either using our own resources or in conjunction with professional associations, universities or other entities." He adds that a common refrain heard in Australia and Europe is that the process of selecting directors is still not as forward-looking as it could be. Companies do not always review what new domain knowledge or industry experience they need to bring in at senior level. "Whatever the type of company, the major shareholders should want people who can really add value," Mr Banks emphasises. "That might be seen principally in the ability to chair internal committees in audit or compliance matters, or in the willingness to really drill down and make a difference to the business." He notes that the most common board weaknesses can usually be quickly identified. They generally involve a lack of rapport between chairman and CEO, directors appointed by different shareholders with conflicting interests, and people being nominated for reasons of proximity or circumstance, which are not based on business logic. Planning ahead Mr Banks also says that boards are often too slow to introduce new talent. "For example, if the business plan says the company will double in size in the next five years, move into China and make significant investments in new technology, then the board should be changed to reflect this," he says. In addition, whenever it is known there will be a major transformation of the business model, the board should undertake a thorough "gap analysis" to identify missing skills and find people who have them. When assisting with this, Talent Partners often begins with a "grid review" which ranks all current directors against various performance criteria and sees which required competencies are lacking. This process allows the board to "know its own mind and direction" before any recruitment or coaching begins. Once the basics are clear, the executive search firm can sound out possible candidates and make approaches confidentially. This may be especially necessary if the chairman is contemplating changes, or wants to inform incumbents diplomatically that they will be expected to upgrade their skills. Mr Banks explains that it is equally important to have clarity and to know exactly what is needed concerning the appointment of non-executive directors. "Part of our job is to make clients think about what kind of expertise, industry experience and brain chemistry will help," he says. "We also suggest they should not recycle people, but be prepared to open up director-level positions to new faces with the ability and ethical approach to do a good job on a board." The right direction Companies have received a sharp reminder about the need for high standards of board-level expertise Executive search specialists can assist in defining key responsibilities and recruiting suitable candidates It may be necessary to fill any skill gaps by ranking main criteria and arranging appropriate coaching Companies should anticipate business developments and change their board composition accordingly Taken from Career Times 7 October 2005 Your comments are welcome at [email protected]