The pressure is on for organisations to diversify their boards, bringing more women and people from minority groups into the mix, write Anthony Hesketh, Jo Sellwood-Taylor and Sharon Mullen for Harvard Business Review.
Executives with a broader range of backgrounds are in demand too, as companies seek to connect more effectively with customers and employees. Yet, demands on directors to be skilled and savvy in technology, governance and sustainable efficiency are ever-increasing.
In this climate, how can you prepare yourself for a seat in the boardroom?
The authors, all human resources experts, say it can be hard for those who have experienced the hands-on power of the C-suite to adapt. This effectively puts non-top-executives – and, therefore, minorities – on a more even footing.
STRENGTHEN YOUR SKILLSET
But what makes an effective director in 2020? Hesketh, Sellwood-Taylor and Mullen asked around 50 board members of global companies about their experience and analysed the responses. They concluded that candidates need to demonstrate a good range of intelligence in five different areas:
1) Numbers. Directors must be able to understand and assess the financial state of the business – not in a specialist sense, but through a good working knowledge that allows you to ask the right questions about the organisation’s capital structure. The authors suggest you expand your knowledge by observing “carefully how assets, investments and leveraging combine to drive free cash flows (FCF) and listen online to earnings calls”.
2) Strategies. Leading on from the financial side, it’s important to be up to speed with agile strategic thinking, particularly relating to increasingly high-priority environmental, social and governance issues – the company’s health, not wealth.
“Increase your exposure to your firm’s business model, understand how it relates to your strategy and operations and how changes release (and potentially put at risk or destroy) economic value,” say the authors.
3) Relationships. Clear communication and creating a sense of togetherness is important in a high-pressure boardroom full of egos. Observe and listen well and look for decision-making opportunities.
4) Purpose. Focus on an area where your input has the best chance of making a difference and make best use of it. Watch and copy others who do this.
5) Culture. To be effective, it’s important that directors operate in a trustworthy climate where it’s OK to point out when business could be better or situations could be handled differently. “Work on your ability to read, get along with, and improve the culture of diverse groups of peers by joining cross-functional, cross-industry and cross-culture groups,” say Hesketh, Sellwood-Taylor and Mullen.
CHOOSE YOUR ROLE
Deciding what kind of board member you would like to be is also helpful. The authors define four distinct types:
- The police officer, happy to hold the board to account.
- The data junkie, money savvy and focused on targets.
- The architect, establishing strong, long-lasting roots.
- The pilot, taking the eagle-eye view of value.
Preparation is key if you want to step up to the board. Follow the authors’ intelligence pointers above, and also ask experienced colleagues and contacts for their advice.