“Dear Stan,
I am a senior professional, having served as an officer of various companies. I’ve never been a CEO, but would like that opportunity. I’m interested in serving as a director on other companies’ boards, in order to expand my skills and gain a higher level of business acumen. What classes should I take, and are there other ways to prepare? How does one achieve a board seat in a private or public company?
Signed,
Ready to Step Up”
Dear Ready,
I have the pleasure of being a member of the Corporate Directors Forum, a non-profit organization whose mission is to promote better companies through the education of directors and sharing of expertise amongst us. While most of us do serve on boards, some do not yet hold that position, and would like to. Your questions are fairly common. Many people who have reached your level of experience would like to advance in their careers further, and serving at the highest level of an organization is indeed being a director. It is where strategy and long-term thinking (hopefully) are welcomed.
To help you in your goal, I must apologize in advance for perhaps being too blunt. My intention is to give you the straight scoop as I know it, and to help you really make progress on your goal, rather than sending you down a path that will feel like progress but not improve your chances of achieving a directorship. The real question is, are you willing to do what it actually takes to serve on a board? Taking classes or seminars alone won’t cut it.
Imagine you are a majority shareholder, looking for a director. Why would you be? One reason could be that you need expertise at the strategic level that does not yet exist in your current directors or management. That expertise could be financing knowledge and contacts among the investor community. You could need technical advice on product development. You could be experiencing dysfunction on your board and need to change one or more directors due to intractable conflicts. You may need to find an outside director who has no conflicts of interest, in order to balance the influence of directors who are closely related parties, or who have developed a lack of objectivity. You might need to beef up the board pedigree to be able to attract additional investment, or to satisfy a current minority investor who wants representation but is not willing to serve themselves.
On a more nefarious note, if you are somewhat Machiavellian, you might be hoping to re-balance the power on the board towards a view more consistent with your own. And you might be hoping to find a spot on the board for your brother-in-law, so your spouse will get off your back about helping him in his career. You could simply need to fill a vacancy to satisfy the By Laws.
In sum, the reasons are financial, operational, technical, organizational, legal, personal and/or procedural. A shareholder doesn’t wake up one day and say to themselves, “Gee, I should give somebody an opportunity to learn how to be a director so that they can advance their career and fulfill a personal goal.” The shareholder wants somebody that serves a specific set of objectives. And they want someone with significant experience.
Here we are at the same conundrum we all faced when we first knocked on the Corporate Door, looking for our inaugural professional position. One cannot get a job without experience, it seems, and one cannot get experience without a job. So how does one get that first director position?
One method is starting your own company, whereby you are immediately the CEO and Chairman of the board. I’ve found this to be a sure-fire strategy, because there is no one’s permission you need. Bingo. Instant experience. The second method is to invest enough money in a company that you can require being a director as one of your conditions. These two methods account for the vast majority of first directorship experiences. Then, after a couple of decades of running a business (or two), serving as a director to your own organizations, you may have acquired the knowledge and experience to be of value to someone else’s company. If your business acumen becomes known to others, they will recognize your value and someone will one day inquire as to whether you want to be considered for a seat on their board.
A third way to get your first board seat, which is harder to do and takes longer than starting your own company, is to achieve the job of CEO, which normally comes with a directorship. Rising within someone else’s business to the job of CEO takes a long time. At least it should. If you rise too fast, you don’t get the experiences behind you that will help you be successful, and the company who would assign the CEO role to someone who is inexperienced probably isn’t very well managed, or there is little to lose. One still might accept such a job, even in a poor business, in order to get the experience, of course. Experience is more important than compensation, because with it, compensation rises faster and longer. Without it, compensation stagnates after a point.
So my advice to you is, simply, become a CEO, start a company, and/or invest in one sufficiently to demand a seat at the table. Those are your best bets to achieving the coveted role. At least, you’ll covet it until you get the seat. As they say, be careful what you ask for.