Corporate boards are evolving—their look and feel are different. With rule changes like the ones in California, 2020 could be a banner year, as a wave of new directors sourced from underrepresented women and minorities seek out and obtain seats on high-profile corporate boards.
Research has shown that increased diversity in the boardroom is connected to more robust corporate performance, making diversity critical in today’s global business environment, not just a question of compliance and values.
In 2018, Women on Boards (California Senate Bill 826) became law, advancing equitable gender representation on California corporate boards. California now leads as the first state to require publicly held domestic or foreign corporations whose principal executive offices are located in California to have at least one female director on their boards as of Dec. 31, 2019, either by filling an open seat or by adding a position.
Depending upon the size of the publicly held corporation by Dec. 31, 2021, one or two more female directors would be required.
Before Joining a Board ...
As you consider board service, do your due diligence. It is wise to learn as much as you can about the organization beforehand. Male or female, if you are a prospective board member, here are some considerations to enhance your chances of landing that position.
- Does your skill set match up? What competencies and skills do you possess that would contribute to your effectiveness as a director? What contribution does the board think you could make? Is there specific input the board is looking for from you? Ask yourself, will you have the credibility to influence boardroom discussion? What are your reporting structures? Is there autonomy, or will you. find that everything is decided by a committee?
- Do your homework. Clearly understanding what the board is looking for and have clarity on how your background and experience will add value. In the context of the business, this is a critically important component. Does the company have a clear and consistent strategy? What are the objectives over the next year? What about three years out?
- What is the structure? How is the board structured? Are there descriptions of the responsibilities of the board as a whole and individual board members? Are there descriptions of board committee functions and responsibilities? Who are the board members? Does the organization have directors’ and officers’ liability insurance?’ What do you know about the other members, are they useful?
- It’s about teamwork. Are you a team player? Think about the way to demonstrate that you can play on the team and compromise. Citing specific examples of where you succeeded by collaborating with your peers is a must.
- Trust is a must. One thing board members look for when choosing new members is, how will that new person respond when the going gets rough? So, when interviewing, you’ll want to provide examples of high stakes or tense situations where trust was earned, and decisions panned out.
- Your relationships are key. Many board members receive their positions through existing connections, so reaching out to people who are already on the board of a company where you’d like to serve could help in the process. Look for common backgrounds. Perhaps you are alumni of the same schools. LinkedIn and other social media are a valuable source. Private equity, venture capital, and asset management firms can be a good source of referrals for these positions. They often have talent partners and corporate governance professionals who are in charge of sourcing new directors for their portfolio companies. Reach out to your contacts and stay in touch.
- Showcase your area of expertise. Companies more often appoint board members with knowledge in emerging areas. Professionals savvy in cybersecurity or customer insight are attractive.
- Join other organizations. If you are engaged in a cause, look for other opportunities to join the board of a relevant nonprofit to develop your skills and experiences further. In Silicon Valley and San Francisco, SVDX, or Silicon Valley Directors’ Exchange, and NACD, or National Association of Corporate Directors, provide valuable meeting places for prospective directors to learn about the nuts and bolts, as well as get regular briefings on cutting edge issues, while meeting other directors and thought leaders.
- Know where you can be most helpful. Do you know “what you don’t know?” Where can a board member have the most impact driving performance? Take stock of your skills and expertise; ask company management how your skills fit with the company objectives and where you can be most effective. Find a mentor or talk to in-house counsel or outside lawyers to gut-check your SWOT analysis and ask what you might have missed.
- Make your voice heard. You’ve done your homework, now you should have a good sense of how things get done, who wears which hat, and how decisions are made. You are now better prepared, and it’s time to make your voice heard about areas of concern and new business ideas. You’ve established credibility—spend your political capital wisely.
Joining a board can provide an unparalleled experience. Joining the wrong board can involve time, unnecessary distraction, and can even put your assets and reputation at risk. Does the work of that board sound exciting? Your board work will be much more satisfying if it does!
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Louis Lehot is the founder of L2 Counsel PC. He is a corporate, securities, and M&A lawyer, and helps his clients, whether they be public or private companies, financial sponsors, venture capitalists, investors or investment banks, in forming, financing, governing, buying and selling companies. He is formerly the co-managing partner of DLA Piper’s Silicon Valley office and co-chair of its leading venture capital and emerging growth company team.