THE BOARD INTERVIEW COVER STORY Dynamics of the board interview You want candidates who meet the requirements of cultural fit, the right skill set, and meaningful diversity. By Blythe McGarvie

oard members are no longer hand- to consider in selecting people to join your board. picked by CEOs to hand-stamp the The chairman of the board and the CEO want CEO’s policies. All board members someone he or she considers a colleague. In other know the importance to effective cor- words, will existing board members respect the porate governance of choosing a new opinion and knowledge of the new member as Bmember. The nominating and governance com- useful to helping solve the problems and set the mittee has responsibility to manage the process strategies of the company? but it is truly an inclusive role once the committee No one expects the candidate to know every- narrows its selection to the top one or two can- thing about the company during the interview didates. Shareholders vote on the new member at process. We expect an understanding of recent the subsequent annual meeting. analyst presentations and the annual report. We As someone who serves on several nominating look for what intrigues the candidate about our and governance committees, I have developed a business to measure both fit and sincerity of in- rubric to make good de- terest. Yet, fit also depends on specific need and cisions during the board qualifications. If the company needs someone interview process. Look- who handles turnaround and/or high-growth ing for a good fit with a situations, different people will qualify. We look company’s culture creates for someone in the interview who projects an the foundation of the in- understanding and capability of addressing the terview. But two other matters that confront the strategic issues that criteria are critical: cer- may be hurled into the boardroom given today’s tain skills and diversity. environment of cyber security, activists, risk management, and talent shortages. Cultural Fit While some companies consider a candidate’s By far, cultural fit is the worldview, others ignore it. We focus on compat- most important quality ibility from an energy and commitment perspec-

Blythe McGarvie joined the faculty in 2012 as a senior lecturer of business administration. She had been chief executive officer of LIF Group, a firm that provided strategic and financial counsel to help clients achieve economic objectives and enhance their corporate governance. Prior to founding the firm in 2003 she was based in Paris as the executive vice president and CFO of BIC Group. She is a director of Ltd., LKQ Corp., Sonoco Products Co., Inc., and Inc. and formerly served on the boards of Lafarge NA, Pepsi Bottling Group Inc., and Travelers Companies Inc. She is the author of Shaking the Globe: Courageous Decision-Making in a Changing World (, 2009).

SECOND QUARTER 2014 21 THE BOARD INTERVIEW

tive. One time I interviewed a retiring CEO who Required Skills clearly was tired and just wanted to find a board It takes about a year for a new board member seat for prestige. The search firm never identified to learn the internal financial and business his goals and instead just assumed his credentials processes of a company. To recruit the right would satisfy the committee. They didn’t. We board member, first the committee must be continued our search. quite clear about what skills the company re- Finding a candidate who fits into the culture quires. Perhaps new technology or geographic means she or he must understand the organiza- expansion will change the future dynamics of tion’s history, employee culture, business goals, the company. Or, the industry or company has financial position, and degree of top executive just experienced turmoil and you need some- stability. You will be well served if such a can- one to stabilize your position and improve your didate has the time and desire to join the board, processes and reputation. particularly when facing difficult future decisions If you already decided the candidate would fit and collaborations. into your culture, probe and confirm through

Board interview basics

By Dee Soder advised us of an executive who met all require- executives said they were ready for a board ments, but she “failed to mesh with one of interview. But, in a striking disparity, 27 of 33 ondering why Sam or Susan got several directors interviewing” — so, “no go.” sitting directors said candidates could handle on the board and you didn’t? The The executive was from the right size compa- the interview better. Wanswer is often the interview. ny and industry, a former CFO with regulatory Some cited “flubs” that derailed otherwise Candidates think they’re prepared, when fre- knowledge and international experience, lived positive interviews. Consider the dynamics at quently that is not the case. an hour from company HQ . . . but she “missed” play: board members want an interviewee to Board appointment and director selection in the interview. feel good about the company and the inter- have changed over the years. Where previ- For decades my partners and I have helped view in case they encounter them elsewhere. ously boards would tap people they knew or CEOs and boards consider prospective direc- One governance expert noted, “I’m sure he/ seek a candidate with one or two specific qual- tors. Working behind the scenes I’ve success- she would be a good director, but we didn’t ities, now boards will establish a more com- fully helped dozens of executives become and see it.” Nearly every director said the first prehensive matrix of the skills, demographics, remain directors. While executives are more discussion with the candidates under selec- diversity, experience, and personality type that knowledgeable about the substance of gover- tion was a major determinant in the ultimate they are seeking. A search firm leader recently nance, their interviewing skills frequently lag. appointment. As one noted director confided, most people While the challenges of board service are understand the process of governing, but “pre- higher than ever, there are many more highly sentation is often problematic” and “objective qualified individuals who want to be directors. feedback is minimal or less.” Competition for the few board openings that To verify the importance of presentation come up is at an all-time high. Accordingly, in a board interview, I queried current and even seasoned directors need to go a step prospective directors. The results: 41 of 50 beyond to prove their value during the board interview. “It’s not enough to have the right qualifications — you need to ace the inter- views,” one nominating chairman declared. ‘It’s not enough to have Here are some of my and my survey sample’s the right qualifications board interview basics. — you need to ace • Know the company’s past, present and future so you can better show your value. the interviews,’ one Understand its business, its position, competi- nominating chairman tors, and potential problems. Consider how the composition of the board aligns to its objec- Dr. Dee Soder declared. tives — does it have expertise to fill gaps and

22 DIRECTORS & BOARDS THE BOARD INTERVIEW references that the candidate has the ability to to enhance the reputation of the company.” The put his ‘nose in and fingers out’ of the details as specific answer mattered less than the approach a board member. You are not recruiting a CEO to the problem. or CFO. You want someone who is not going to micromanage yet is engaged and understands Diversity One time I interviewed how to communicate and collaborate with top Research shows that a retiring who management and other board members. For- if you want to win CEO mer KPMG board member Candace Duncan a sprint, you need clearly was tired explained one of her tenets for evaluating can- one skill: speed. and just wanted to didates. Ms. Duncan says she “would ask how a But, if you want to candidate handled a troubled situation. Depend- win a marathon you find a board seat for ing on his response, I could tell very quickly if he need many different prestige e continued knew what best controls and processes would be skills: speed, endur- . W required to eradicate the issue and in a manner ance, recovery, and our search.

solve problems? (Caution: Let the interviewers ten. Nor do they want someone too agreeable colleague — collegial and respectful of others’ bring up a major problem first.) Go beyond the or passive. Mock interviews help, especially opinions even when disagreeing. Women need annual report to learn the company’s business for prepping difficult questions. Afterward, you to evidence “wearability,” especially if they are and needs. Valuable insights about a compa- may have had a wonderful interview, great the first on a board. ny’s plans are in newsletters, industry articles lunch, and heard that all is looking good for your and speeches. Listen to earnings calls to help candidacy. It may be, but remember the nomi- • Know the personalities. This is much get a sense of the company and its significant nating committee is probably talking with other more important than it was even a few years events for that quarter. One executive even flew qualified people. I don’t recommend asking for ago. People are complex; in today’s economic to a company’s headquarters prior to an inter- feedback on your interview. environment the complexities are magnified. view. “Seeing the facility beforehand helped Demeanor and attitude are especially signifi- me during the initial interviews,” she said, add- • Beware TMI. Don’t overload someone with cant character strengths in dealing with cur- ing that she was sure that it helped secure the information. The inability to summarize one’s rent board and company challenges. Know directorship. value is very common and detrimental. The yourself, how you’d relate to other board mem- executive with many accomplishments needs bers, and show that during the interview. The • Get behind the looking glass. Why are to be able to state the two or three that relate time to correct any behavioral quirks is before they interested in you? Are specific skills to a board’s needs. Be able to bring relevant the interview. needed? Did you adroitly note your expertise? highlights to the conversation that show your Conversely, is there a concern that you might value and judgment. Directors’ most frequent Above all, you need to be true to yourself. be disruptive, too busy, or arrogant? Have you complaint about interviews is a candidate’s ver- Don’t sell yourself into a situation that you’ll persuaded them differently? A prominent PE bosity, so don’t talk for more than a minute with- want to resign from in a year. If the company director noted that “often CEOs don’t under- out stopping. Let them ask you for more. (Use or board is a bad fit, don’t force it. It will come stand they need to sell us on their value.” judgment: showing you know too much can be back to haunt you. Another advised that while candidates realize intimidating to some.) If you get carried away or the company has different facets, they can lack often finish people’s sentences, practice so you Dr. Dee Soder is the founder and managing part- awareness that the board members have “dif- don’t — switch your watch to a different hand ner of The CEO Perspective Group (www.ceo ferent backgrounds, personalities and theories as a reminder. perspective.com). She advises top management about who would be a good addition.” A couple and boards on a wide range of issues, and her hours of study of each board member is recom- • Define yourself. Know what you bring to work includes highly sensitive executive and mended to understand the individuals, board the table. Be able to easily state and show it. director assessments and coaching. She has dynamics and culture. Your bio should similarly reflect a theme and advised a number of the executives selected in unique persona. For women, minorities and the Directors & Boards series of “Directors to • Avoid the echo chamber. Ask smart ques- first-time board members, it’s particularly Watch” and has written several articles for the tions — and then listen. People don’t want a important to be able to artfully describe yourself journal over the years. She can be contacted at colleague who is too aggressive or won’t lis- and, even more, show that you would be a good [email protected]

SECOND QUARTER 2014 23 THE BOARD INTERVIEW

often a support team. Boards need diversity to within the nominating and governance committee, understand business in geographies in which they a commitment to geographic and cultural diversi- compete and cultural diversity such as racial or ty will improve the board interview process. Even gender perspectives to in 2014, I am surprised how few candidates have understand their cus- lived outside of their home country and truly un- The candidate’s tomers, suppliers, and derstand what it takes to compete in this intercon- employees. nected world. The best way to discover gaps during specific answer to the During my research the interview process is to ask questions about the question mattered less for Shaking the Globe, composition of the employee and customer demo- I discovered a study graphics with whom the candidate has worked. than his approach to showing that compa- You want a unanimous vote once a board can- the problem. nies with more women didate has passed the hurdles of cultural fit, skills, on their boards have and diversity. ■ significant higher re- turn on equity, return on sales, and return on in- vested capital. Just as skills must be agreed upon The author can be contacted at [email protected].

The most valuable director of all

By Harry J. Bruce become real contributors to the board. The A board is supposed to be made up of performance of these contributors often can senior advisors with substantial years of busi- e all have heard the stories about be rated by the strength of their participation ness experience behind them. Nevertheless, directors who doze during meet- in spirited, in-depth reviews of management’s be careful of letting a board get too old. An Wings, sit silent while others engage actions and their ability to act as a consul- elder statesman or two can be useful, but gray the issues, and rubber-stamp the CEO before tative resource to the CEO without being hair alone doesn’t guarantee experience or questions have been clarified. It takes no antagonistic. Each director should be con- the willingness to apply it. I once witnessed a special expertise to identify these examples tributing a particular type of expertise which director enter the boardroom in a wheelchair of deadwood, though it may take some time he has developed out of his own business pushed by a male nurse. During the meeting and skill to ease them off the board. accomplishments and which is relevant to the the director died. This sort of thing can be The more challenging task is to identify company on whose board he sits — perhaps awkward. director candidates who, once elected, will marketing, or engineering, or finance, or law, Even if a director is not chronologically old, or plant management. Particularly helpful are extensive tenure on the board can become a directors whose professional strengths can negative. Directors, like managers, need to buttress or compensate for weaknesses in the remember that each executive tends to have CEO’s training and experience. a finite shelf life in any given position. After The most valuable director of all is the one about six years of doing the same job or sit- who can challenge the CEO while at the same ting on the same board, it is a rare bird who time supporting him, a person who has mas- doesn’t begin to get a little stale. A six-to-ten- tered the difficult art of “disagreeing without year rotation on a board, or a mandatory exit being disagreeable.” These extremely rare from the board at age 70, whichever comes individuals can contribute much-needed knowl- first, might help maintain freshness and vital- edge and experience and are able to help steer ity. The board should not be bored. the business around potential hazards without displaying the type of know-it-all attitude that Harry J. Bruce was the retired chairman, alienates fellow directors. At their best, this type president and CEO of the Illinois Central of director can bring up a good idea so subtly Railroad and a long-serving corporate that the CEO will believe he thought of it himself. director when he wrote a cover story for Directors of this type do much of their best work Directors & Boards in 1997 titled “Duty, beyond the boardroom in the little-observed Honor, Company.” This is an excerpt from Harry J. Bruce realm of informal governance. his article.

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