Originally Published in Biz Magazine, June 2016
Boards of Directors have a job to do. This means that every Board needs to consider what makes for a competent Board. Just as a baseball team comprised of nine pitchers won’t win many games,, A Board comprised of individuals from the same discipline or industry will not be effective. Boards need the right combination of talent to fulfill their responsibilities.
The basis for determining the talent needed to form the Board of Directors comes from two elements: the nature of the organization being governed; and the job responsibilities of the Board of Directors. Using the Board’s terms of reference and the mandate and strategy of the organization we can articulate the competencies needed to fulfill the job. This is the same exercise we go through for employees. An employee has responsibilities and in order to carry out those responsibilities there is an expectation of what makes a person competent for the position. The same is true for Directors.
Booker & Associates has developed a diagnostic process through which we can determine if a Board is comprised of the necessary talent. The Board’s ability is reflected by the composition of the individuals around the table. The first step in the process is to identify the desired skills, knowledge and experience based on the needs of the organization and the stakeholders. Each organization has different needs in the talent of the Board. A financial institution may demand strong financial and risk literacy. A social services organization may demand strong community knowledge.
The next step is to have each Director complete a diagnostic tool which has five dimensions to the assessment: knowledge and capability; attributes; diversity; experience; and education.
The first dimension requires each Director to evaluate their knowledge and capabilities in relation to specific talents required for the governance of the organization. A common evaluation scale we use is: expert, proficient, introductory. Expert means a Director has deep training or experience in the subject and is able to explain the concepts and applications to others. Proficient means they have some training or experience in the subject and can work through material themselves but are not able to help others in understanding the concepts. Introductory means that they have had exposure to the subject but don’t have a clear understanding of the application or concepts and need others to provide explanation.
The next dimension gathers information on a Director’s attributes. Attributes cover aspects such as capacity to serve; independence from management; ability to communicate effectively and respectfully; personal reputation; open mindedness; willingness to listen to others; respectful of diverse perspectives; and willingness to be part of a team.
The dimension of diversity covers demographics (like gender and age), background, and thinking style. Having different thinking styles adds to the dynamic discussion around the table – Boards need Directors who think strategically, those who have a respect for compliance; those who like broad perspective and at times deep discussions; and those who are methodical, quick, reflective, and analytical. Diversity on the Board will allow for thorough discussion, multiple perspectives, new ideas, and taking action.
The fourth and fifth dimensions of education and experience are pulled from the Directors’ resumes. Education covers the curriculum of education, designations and trades which a Director has completed. Experience covers the positions held during their working career, the industries which the individual has worked in, the positions held, as well as experience on other Boards of Directors, and length of time in the sector which the organization operates.
The extract below illustrates a part of the diagnostic tool. It shows the ideal rating which has been determined as required by the organization for specific subject matter, and the next two columns show the individual ratings provided by two Directors. It is not necessary that all Directors meet the ideal rating.
|Insert Name of Director:||Ideal Rating||Director 1||Director 2|
|KNOWLEDGE gained through education and/or experience|
|Executive Talent Management||2||1||3|
|Technology as business channel||2||2||2|
|Other (specify):||Rules of Order|
|3 = expert; 2 = proficient; 1 = introductory|
The talent diagnostic process can be used for a variety of purposes. It can be used to inform the Director recruitment process, determine the orientation process for new Directors, and assist in designing the ongoing education program for Directors.