In most companies, public and private, the board of directors sets the direction and strategy for the organization.  The board serves a wide variety of constituencies, including customers, employees, management, investors, and the communities in which the company operates.  The board makes a visible statement about the company through its composition and leadership.

Historically, many boards evolved as the owner or owners of the company asked people they knew to sit on their board.  In many companies, the board consists of individuals who have worked for, or been associated with, the company for a long time.  In public companies, the use of independent directors has become much more prevalent, primarily as a result of the regulations and guidelines imposed in the past few years.

The Need for New Board Members

The increasing scrutiny of a board’s role and its decision making processes, the increased time requirement for every board member to adequately prepare for his/her role, and the retirement of many experienced board members are contributing to the need for new and replacement board members.  Time is a precious, limited commodity, and more talented executives/professionals have less time to participate on multiple boards.  Thus, companies must begin to look for new candidates who bring different backgrounds and experiences to the table.

Why Diversify?

As boards and companies consider the evolution of changes in the global business community, they must constantly assess their ability to adequately address the impact of those changes and trends on their organization.  The growing populations of women and ethnic groups in the business world and the customer base are well documented and they are expected to continue.  The globalization of business, the impact of technology and communications developments, the role of a business in the communities it serves, and many other developments are having a direct impact on the success of the organization.

Various studies and surveys are beginning to document that those companies which add diversity candidates to their boards are convinced that the company benefits quantitatively and qualitatively.  McKinsey conducted a study of business leaders who indicated that those companies with female directors saw financial improvement in their organizations.  Other companies with diversity board members have noticed improved customer satisfaction, broader cultural awareness, recruitment and retention success, more innovation in their decision making process, stronger brand recognition, and other benefits.

How Do You Diversify?

Adding a diversity candidate to the board should not be a revolutionary decision.  As the board assesses its current talents and capabilities and as it considers its needs based on its business and the markets it serves, the need for diversity may become apparent.  If so, the board must make a commitment to the program and not approach diversity as “something we have to do”.  The lack of commitment on the part of the board members will probably result in a less than positive outcome, and it may prove to be counter-productive for the organization.

A recent PricewaterhouseCoopers survey of board members indicated that 86% of respondents rely on existing board contacts to recruit new directors.  The study raised the question that if this is the method of recruiting new directors, they may not be tapping new, more diverse resource pools of candidates.

Thus, the addition of a diversity candidate to a board may require a new approach to recruiting.

Carl J. Taylor & Co. Provides Board Diversity Recruiting

Carl J. Taylor & Co. is a retained executive search firm which provides diversity executive recruiting services.  The firm has successfully identified and attracted diversity candidates for boards even after the board members have conducted extensive networking recruiting efforts.  Carl Taylor works closely with a board to understand its needs and priorities, and he actively pursues diversity candidates who will have a positive impact on the board and the company.

If you are considering an addition or replacement for your board of directors, please contact Carl for a free consultation at (972) 490-7697.