Today’s board members require brand new skills

By Kim Villeneuve, President & CEO

Just a few years back, when it came to finding a qualified board of directors, one word seemed to be on everyone’s mind: Enron. It was the beginning of the new millennium and no one wanted to wind up with the same fate as Kenneth Lay. There he was, night after night on the evening news, being led in handcuffs out of the courtroom. Public companies across America quickly heeded the message: When it came to choosing a board of directors, you wanted qualified professionals who were above board, those with exceptional auditing practices who knew how to manage the complex rules of Sarbanes-Oxley.

Not even a decade has passed since then, yet the demands of business, which move at an ever-dizzying speed, have shifted once again. Of course, ethics and accountability are just as important as ever, but instead of being the traits that distinguish one board candidate from another, now they are merely a starting point. Today’s directors require brand new leadership skills, not to mention a whole new spectrum of personal attributes and technical abilities that allow them to adeptly influence decisions keeping businesses ahead of the competition.

CEO leadership versus board leadership

Leadership ability is critical when it comes to hiring any executive, but what makes for a great CEO doesn’t always translate into a great board member. The difference can be summed up simply: CEOs are responsible for providing day-to-day direction, the genesis of which is rooted in the strategic direction determined in concert with a board. This doesn’t mean that directors have a small role. Quite the contrary – an effective board can sink or save a company. But their role is not to micromanage. They are not responsible for running the company or for being its brand architect. Their job is to offer guidance and oversight to evoke maximum impact. They will often provide the subtlest nudges, which in turn will shape the most critical strategic framework within which the CEO will operate.

As an example, imagine we’re dealing with an apparel company interested in sourcing overseas. A director who has international exposure might suggest working with a South American distributor as opposed to a European one. This seemingly minor contribution may have massive repercussions on the bottom line. This doesn’t mean that the director is responsible for choosing the country. Instead, the board member’s responsibility is to use their insight and business savvy to guide the CEO and executive team toward the right decision. And the ability to do this only comes with experience. In other words, when it comes to selecting competent directors, one of the key considerations should be the depth and quality of their relevant experience, which when rich and multi-dimensional will add value in influencing the direction of the company.

When it comes to experience, industry may very well take a backseat to size – the size of the companies on the board member’s resume is more important than the industries in which he or she has worked. Someone with an extensive background and technical capability can quickly come up to speed when faced with an entirely new industry. In fact, the fresh perspective is critical. But the ability to add value to the company only comes with experience in navigating the demands of a complex company.

Large companies have very different leadership needs than smaller ones. And their complexity increases with size. It takes an unusual knack, a very finely tuned “peripheral vision,” to understand that what happens in Finance has an impact on what occurs in IT. Those with experience in large organizations have gained the ability to manage many moving parts and understand how the pieces fit together. In other words, they understand the impact that one change can have on the machine as a whole.

Understanding when to lead and when to cede

As important as a deep and varied work background is, candidates should not be selected merely on the basis of their resumes. A board member’s interpersonal style can play just as great a role in his or her effectiveness. As a rule, successful candidates should have what may seem like contradictory traits: decisiveness yet respect for others’ opinions – in a word, courage. A board member needs courage to do what is right, which begins with courage to listen more carefully, courage to step forward or courage to pull back. Timidity does not make for good decision-making. But arrogance doesn’t either.

In short, a competent director ensures that decisions are a collaborative effort. He or she is able to express a point eloquently and succinctly so that other members understand a scenario they may not have experienced in their own careers, pushing the group into a deeper discussion. However, a board member needs to be just as masterful at letting go once the point has been made, allowing the board as a complete entity to make the right decision. This also implies humility, displaying an enormous dimension in the ability to listen and learn.

Other traits that are important to effective board leadership: intelligence, integrity, depth of character and vision, which combine together to create wisdom.

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