Selecting Board Members for a Successful Business

Your board represents your organisation and in order for it to succeed it’s important to have a diverse board with a range of skills and expertise. According to the Corporate Governance Code, ‘The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively’ There should also be ‘a formal, rigorous and transparent procedure’ for the recruitment of board members.

Within many private organisations, board members are often selected due to the skills and experience they may be able to bring to the Board. Whilst in other sectors such as membership organisations, Board members are elected and ‘run’ for a seat usually to represent a stakeholder group or constituency, but the danger with this is those representatives may not realise that their duty first and foremost should be to act within the best interests of the organisation as a whole, not their constituents, otherwise there could be a conflict of interest and internal politics, which could make the organisation suffer.

A representative board might sound like an easy way to recruit board members, but there are issues such as:

• Cumbersome decision-making if constituents or stakeholders need to be consulted
• Can potentially limit the ability to choose board members with the right skills and expertise
• Reduced engagement of board members if they are acting out of duty rather than interest

On the other hand, board members that are selected may be able provide your organisation with more value, but it requires effort and can sometimes be expensive to go through a recruitment process to find Board members with the relevant skills and experience that are the best fit for your organisation.

Selecting board members

A board is meant to help devise operational and financial strategies. If the board is made up of the same types of people with similar backgrounds and experience, then that is not always conducive to the best decision-making. If, however, the board is made up of people with different skills, experience and backgrounds, then that can promote more effective and creative decision-making, since strategies will be discussed from a variety of perspectives.

A nomination committee should have a majority of non-executive directors who are expected to evaluate the skills and expertise of the existing board and fill the gaps when appointing a new member. The Code states ‘the board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors’. This can help identify skills gaps as part of a strategic board recruitment process. In addition, you only want fully-committed members of your board, therefore there needs to be a strategy for succession planning and ‘refreshing’ of the board, ensuring those appointed are dedicated and can devote the necessary amount of time.

Recruiting for the board is no easy task, which is why a skills audit is essential. The most effective boards are comprised of individuals with different skills and expertise who can lead, critically evaluate ideas, challenge and debate in order to make the best possible business decisions. Ideal board members should:

• be diverse
• possess a range of skills and expertise share the organisation’s values
• share a vision for the future be adaptable
• create an open culture and lead from the top down be accountable
• Have the necessary time to dedicate to the organisation

We can help

If you need help in conducting a board evaluation, we can provide one tailor-made for your organisation. These performance reviews result in a set of collective and individual targets to ensure that the board operates with maximum efficiency and effectiveness, together with learning and development plans for your directors. We also provide a skills audit to identify current skills and any gaps in skills that need to be filled through proper succession planning and recruitment.

To find out more, call Bridgehouse Company Secretaries on 0845 055 8260 or email info@bhcsecretaries.co.uk