Having the right individual in the right seat is critical for any leadership role, whether it is an executive or a board member. Experienced directors guide management in the company’s long-term strategy, while fresh and diverse perspectives are often essential to weather the changing times. The topic of board composition usually focuses on bringing together the right mix of experience and skills around the top table. One key component in that equation is board succession.
An empty seat
There are many reasons for a board member to leave, including other professional opportunities or obligations, retirement, health reasons, spending more time with family, internal disagreements, or even as simple as term limits. It happens quite often that a company board needs to look for a new member. According to a recent study, in 55% of S&P 500 companies a new director joined the board in the past year, and 21% of those boards welcomed even two or more board members.
Whether a board member’s departure is expected or not, the transition period is usually challenging at best. The exit of a director can create instability in an organization if there is no plan in place to fill the board seat that opened up. At the same time, board refreshment and succession also offer opportunities to increase board diversity and add skills to the team to prepare the company for current and future needs, especially in growing and transitioning organizations or during the turbulent times we are currently in.
Finding the perfect fit
Strategic board succession planning entails proactively thinking through the ideal candidate’s profile and subsequently finding suitable replacements inside or outside the company. As is the case for any vacancy, the best candidate brings something new to the table. The new board member shouldn’t be a clone of the member being replaced, but at the same time, just singular expertise in, for example, cybersecurity or DE&I is not enough either. Knowledge and skills in all domains of board oversight are required to enter the boardroom.
Screening candidates based on their expertise, experience, and alignment with the company mission takes time. Once the top choice(s) are identified, the work is not done. Sometimes, company boards (temporarily) expand the size of the board to allow the selected director candidate to observe the workings of the board during the transition period. In the same realm of preparing a new director for a board position, additional training might be needed to fill potential gaps in skills or experience, especially for first-time directors.
Getting board ready
Putting a board succession plan in place before it is needed is a sign of good governance and effective leadership. A well-governed board proactively builds relationships with the director candidates they are interested in or even keeps a running list for future reference. Forward-thinking company boards make sure their succession pipeline consists of director candidates at different tenure levels to balance their composition. Strategic board succession gives first-time directors the opportunity to expand their skill sets and get board ready ahead of time.
At Corporate Boards USA, our mission is to prepare executives to be highly qualified board candidates. We offer our members educational courses and events, networking opportunities, boardroom news, workshops, and mentorship programs. If you’re serious about getting on the path to the boardroom, apply for membership. We Make You Board Ready.