To expand overseas, transform business models, and pursue myriad growth opportunities, companies need board composition that supports the long-term strategy—and the skills matrix is a common framework for guiding this assessment and pinpointing gaps. How can boards engage in a more strategic process to identify (and recruit) the skills they need to navigate today’s challenges?
At the Diligent Director’s Experience in Napa Valley, Inside America’s Boardrooms host TK Kerstetter explored this question with Hilliard Terry, a director of Umpqua Holding Co. and Upstart Network Inc. Terry, who joined his first board at age 40, gave his perspectives as a next-gen director on how forward-looking companies can select the best board candidates.
Look beyond what’s on paper
“I think the important thing is not necessarily the document but the process by which you get there, and the discussions you have to fully understand the evolution.”
– Hilliard Terry, director of Umpqua Holding Co. and Upstart Network Inc.
According to Terry, the skills matrix process can be “somewhat administrative.” Instead, he said, “it’s really about the discussions you’re having in the boardroom, with your fellow board members, with your nominating governance committee, and with the CEO.”
In these ongoing conversations, he said, board members should think through the strategy and the company’s future. How does that manifest itself into the kind of skills the company will need going forward? Then boards can use an assessment to determine which skill sets current board members already possess and which are needed.
Conversations should be prioritized farther along in the selection process as well, Terry advised. This way, boards can see beyond titles like “financial expert” to gauge the full set of experiences a candidate can bring to the table.
Terry cited his own recruitment to the Umpqua board. He was treasurer of Agilent Technologies and perceived to become a public company CFO, making him a natural choice for a financial organization like Umpqua and the audit committee, on which he now serves.
However, Umpqua was in the process of evolving its board composition to include folks with a technology background, so his experiences with two larger tech companies (Agilent and HP) caught their notice, as did his experience managing employees and operations internationally.
“I think all of those things played into the factors and skill sets I brought to the board of Umpqua at the time,” he said.
One-on-one interviews are valuable for gleaning the full picture of how a candidate can add value, he said. “How will this person interact with fellow board members? Is there a good fit, and is this a person who’s not afraid to bring up weird and wonderful ideas that might be additive to the process?” he explained.
Engage the full range of experiences
“Just because you’re a younger board member doesn’t mean that you have a lesser set of experiences. It just means that your experiences are different.”
– Hilliard Terry, director of Umpqua Holding Co. and Upstart Network Inc
Such a process contributes to a diverse group of board members. Terry cited the value of “a rich set of experiences that allows them to provide insight to the management team or value to the company when something does come up that you might not have planned for, or if you try to look around the corner.”
According to Terry, diversity doesn’t just come down to gender or race. “I think it gets down to skill sets. It gets down to age,” he said. “I think there are a lot of things that are important, and at the end of the day, it’s the set of experiences that you bring to the table.”
These experiences are especially valuable in areas like social media, he explained, which more seasoned board members might not be as accustomed to dealing with. Next-gen directors have more familiarity, along with a different set of views or perspectives that might be helpful.
The trick, Terry said, is for boards to figure out how to appropriately onboard next-gen board members and make them a part of the process. “If you truly engage with them, you’re going to get 100% from the standpoint of richer discussions and more ideas,” he said. “Ultimately I think it leads to better decisions for the company.”
What data do boards need to be effective?
Board effectiveness requires having the right people in the boardroom. The mix of board member skill sets should mirror the company’s long-term strategy–and the succession planning process should be nimble enough to adapt to changes in today’s business landscape.
In what ways could board visibility be improved? Diligent Nominations gives boards access to a global database of qualified candidates that enables boards to search by skill sets, gauge supply, and analyze board composition across peers. Learn more about how Diligent’s Governance Cloud is equipping boards with the information they need to make better decisions.