The Matrix: The Board’s Responsibility for Director Selection and Recruitment

Abstract

How do you build the best board for your organization? What attributes and skills are required by law and what mix of experiences and talents will give you the best corporate governance? What are the commonly required director attributes that are a must for each board and how do you customize and fine-tune your search to achieve a high performance board? Optimal board composition, that is, the best mix of director skills and experience will depend on many company-specific variables. Some of the most important of these variables include: (1) company lifecycle stage, (2) extent to which international markets are mission critical to your future (detailed understanding of target culture, markets and business risk); (3) unique technology dependence; and (4) need for access to financial and capital markets. My goal in writing this paper is to provide: answers to these basic questions, a roadmap for the entrepreneur faced with recruiting a board for the first time, a matrix methodology that every nominating committee and board can employ to systematically define their needs and explore their options, and provoke radical thinking about how any company-specific system of corporate governance may be improved by questioning existing fundamental assumptions. This discussion of board composition is not set out in a vacuum; rather, it is based on a clear prejudice by the author that all current business operations should be a part of and based upon articulated enterprise strategy that is headed somewhere with purpose, and clearly communicated to all involved.

Keywords: Audit Committee, Board Composition, Board Recruitment & Selection, Corporate Governance, Corporate Strategy, Directors, Discrimination, Diversity, Gender, Glass Ceiling, Governance and Nominating Committee, Lead Director, Minority Directors, Race, Sex, Succession Planning, Women

JEL Classification: D23, G30, G34, K22, K40, J70, L20, M10, M13, M14