In past years, the selection process for board directors hinged on whether the candidates were former executives. Luckily, as companies and the world progress, we can see big changes in what it takes to be a board director. For example, Egon Zehnder reports that in 2018, 65% of board directors, being hired, did not have previous executive experience. Though this might be construed as a negative impact on the quality of board directors, in fact, candidates are being held to an equally high degree without companies demanding too much of them.
Do I qualify to be on a Board of Directors?
It takes a certain level of knowledge and experience to qualify for a board position. Companies are looking for leaders who have executive experience and have worked closely with boards previously. Financial knowledge and familiarity have been found to be a big plus for companies. According to the 2022 Annual Corporate Directors Survey, 48% of board members say that they would like to see a fellow board member replaced. The PwC found that the need for board turnover has risen in the past year. In 2020 the PwC also found that 89% of board members found financial expertise to be a highly sought-after skill and 53% of board members said that operational expertise was a plus. However, this does not mean that board candidates have to have specific executive experience to be eligible. Deloitte states that any experience with reforming compensation plans, assessing and retaining talent, or innovating new strategies are all valuable to a board table. In particular, high-level roles in risk, compliance, M&A, crisis management, product development, marketing, sales and digital technology are all items that stand out to a company looking for a board director.
It is important to keep in mind your role in a company as a board member. The board of directors advises instead of operating, so it takes a knowledgeable, clear head in order to be a board member. Companies are also increasingly looking for diversity when hiring board members. It is proven that problems are solved more creatively and quickly when there is a background of diversity.
Serving on a board is not a decision to be made lightly—directors will be leading the company through major corporate events such as litigations, mergers, bankruptcies, and crises of all kinds. As such, companies will also be looking for someone with integrity and loyalty as well as dedication. Furthermore, as board directorships are closely tied to company and stock performance, companies will not accept any individual who is only available for a short period of time.
Finally, those looking to become board members should reflect on whether or not they have the wherewithal to participate in governance. The National Association of Board Directors states that the average amount of time spent on board matters per director was 245 hours per year—just over six work weeks. Employees who wish to continue their full-time job, while serving on boards, will have to inform their employers of the arrangement and confirm that they have the go-ahead as well as the ability to carry out both roles.