It makes sense

A board has an important role in ensuring the longevity and future success of a company, so when looking to recruit or appoint a new director it is more important to cast the net widely. It's more than just about finding the best person, it's about ensuring they add an optimal skill balance for the board as a whole.

“The past is irrelevant, it is all about the future,” experienced director and chairman George Green says.

“It’s all about direction. It’s strategic.

“You’ve got to have in mind how you are going to evolve your board. Thinking at least three or six years ahead, you need to have a good idea of how your company is going to evolve over time, and the important issues you’re likely to face. When you appoint, it is to build the capability to be able to deal with those issues, not just to perpetuate what you already have.”

The Institute of Directors (IoD) maintains New Zealand’s largest database of independent directors, and helps companies match individuals’ skills and experience with their specific business needs.

Approached by a broad range of organisations looking to appoint one or more independent directors to their board, the IoD offers solutions specific to a business’ needs.

“We work with clients to determine their criteria and use this to provide a long list of suitable candidates for consideration,” says IoD Board Services Advisor Kelly McGregor.

“In our experience many boards already know what they need at the table, so we work with each one individually to understand skills, competencies and experience required, and what is expected of a new director to ensure the best match.”

BRANZ Chairman Dr Helen Anderson has used the IoD’s DirectorSearch service twice.

“It’s all about the success of the organisation. The IoD has a dedicated service with DirectorSearch, and the IoD are the governance experts – it’s a no brainer.”

Green agrees the process was not only a time saver for a business’ board, but it has also been a success for the two different companies he has used IoD’s DirectorSearch for.

“Kelly and I had a robust conversation, to get a deep understanding of what a prospective director should be able to contribute,” Green says.

“The whole process appeals; it is efficient, quick and we found our candidate. The fact of the matter is on both occasions I used DirectorSearch, it was outstanding. We got a very good match. I’m still in touch with the director who we appointed 18 months ago. So I know it works.”

The IoD’s Four Pillars of Governance Best Practice states board composition is a major contributor to board performance. Achieving a balance of skills and experience is a key goal and highlights the importance of succession planning.

Board composition

“You’ve got to have in mind how you are going to evolve your board. Thinking at least three or six years ahead, you need to have a good idea of how your company is going to evolve over time, and the important issues you’re likely to face. When you appoint, it is to build the capability to be able to deal with those issues, not just to perpetuate what you already have.”

Green says at Babich Wines a lot of time was spent looking at how the board would contribute to the family business and what the skills and experience gaps were.

“We are a very successful wine maker; skilled at growing grapes, building wineries and making wine, but our future is dependent on our ability to compete in international markets and sales and distribution,” Green says.

“We talked this through with Kelly, looking at candidates and prioritising in order of what we didn’t have but needed. The diverse calibre of directors the IoD database offered was impressive. Kelly was really good throughout the process. Her experience and ability to find candidates in the database to meet the refinements in our specification resulted in a final short-list of four or five who were all exceptional.”

McGregor says a balanced board needs a mix of skills and experience.

“The board’s perspective and effectiveness will be limited by drawing members from similar backgrounds or grouping together a number of narrowly focused specialists who are unable to think or question outside their own area of expertise,” McGregor says.

“Diversity on a board is vital but should always be through the lens of demonstrated competence. Diversity includes and goes beyond gender. A board with a variety of perspectives is likely to ask a wider range of questions when presented with options. The board should consider diversity in terms of the skills and capabilities it wishes to best advantage the organisation with.”

Selection

DirectorSearch also offers organisations the opportunity of additional recruitment support. For Anderson, McGregor provided guidance and sat on the BRANZ interview panel.

“Using IoD services not only to screen applicants, but to help us establish criteria to assess and elect was really helpful,” Anderson says.

“Having an independent expert in governance guide us, especially for those on the panel who hadn’t appointed at this level before saved us a lot of time. Kelly was a wonderful mentor and guide for them.

“It is more successful because it’s running through the IoD. It’s all about the success of the organisation.

Green agrees.

“On two occasions we got an outstanding result,” Green says. “It just makes sense.”

Increasing demands are being placed on directors to perform, often in complex and challenging environments. In the next boardroom, the second article in this series will focus on director remuneration, what is fair in order to attract and retain the best people to drive growth and performance for your organisation.